Clydesdale Bank have set aside another £450 million to compensate customers for mis-sold Payment Protection Insurance. It comes after the Financial Conduct Authority (FCA) imposed a financial penalty of £20,678,300 on Clydesdale Bank and Yorkshire Bank (which are part of the same group) on 14 April 2015 in relation to the complaints handling of its customers who had purchased Payment Protection Insurance (PPI) from them.
The FCA imposed the fine on Clydesdale Bank as it is believed that Clydesdale Bank breached principle 6 of the FCA’s principles for business and relates to the unfair treatment of customers, complaints handling and customers interests.
The FCA have stated that Clydesdale’s failings were unacceptable and fell well below the standard that the FCA expects. It has also been revealed that Clydesdale Bank misled the Financial Ombudsmen Service (FOS) by providing false information to the FOS in response to requests from the FOS about documents held about the PPI policies sold to individual customers.
A team within Clydesdale Bank’s PPI complaint handling operation adopted a practice of altering system print outs relating to loans and mortgages that had been repaid more than seven years prior to the date of the complaint and deleted all PPI information from a separate print out listing the products with PPI sold to the customer. This led to the FOS being misled about the information available to Clydesdale Bank and the FOS for determining any redress due to customers and determining the complaints.
As a result of the practices of the above team within Clydesdale Bank’s PPI complaint handling operation and their inappropriate policies towards the handling of mis-sold PPI complaints, complaint handlers when calculating redress for credit card PPI complaints would not consider credit card statements that pre-dated the year 2000, or take steps to estimate the PPI payments made before that date.
This clearly demonstrates a failure in Clydesdale Bank’s mis-sold PPI claims processing process to adhere to the rules and guidance given by both the FCA and the FOS.
Another concern is that up to 50,900 upheld complaints may have resulted in inadequate redress for customers and up to a further 42,200 may have been rejected unfairly. The FCA also found deficiencies in the training and monitoring of Clydesdale Bank complaint handlers and that complaint handlers were failing to identify cases where the PPI policy sold was unsuitable for the customer.
This latest £450 million provision set aside for mis-sold PPI will take the total cost of the mis-selling of various financial products at Clydesdale Bank to £2.1bn and is the largest ever fine imposed by the FCA for failings relating to PPI.
This is not the first time that the FCA has had to fine banks not only for the mis-selling of PPI but also for their complaints handling processes and treating customers fairly in terms of calculating redress, and it probably will not be the last.