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Regulator hands out biggest ever penalty

Clydesdale hit with record £20.7m fine over PPI complaints

Clydesdale BankClydesdale Bank and Yorkshire Bank have been fined £20.7 million for poor handling of complaints over payment protection insurance.

It is the largest fine handed down by the regulator in relation to PPI and comes almost two years after the banks were find almost £9m over failures to properly calculate mortgage payments.

The FCA uncovered a catalogue of failures over PPI complaints which included false information being supplied to the Financial Ombudsman Service.

One of the banks’ complaints teams altered documents to make it appear as though they did not have relevant information. The team also deleted all PPI information from another document listing products sold to the customer.

These practices meant that of 126,000 PPI complaints made to Clydesdale between May 2011 and July 2013, up 42,200 may have been rejected unfairly. It also said up 50,900 complaints that were upheld may have been resulted in inadequate redress.

The regulator found that complaints handlers did not identify cases when PPI policies were unsuitable for the client. It also found deficiencies in the training and monitoring of complaints handlers.

Georgina Philippou, acting director of enforcement and market oversight at the FCA, said Clydesdale’s failure to provide correct information increased the size of the fine.

“The fact that Clydesdale misled the Financial Ombudsman Service by providing false information about the information it held is particularly serious and this is reflected in the size of the fine,” she said.

“We have been very clear about how firms should treat customers who may have been mis-sold PPI. In ignoring documents it held which were relevant to its customers’ complaints, Clydesdale failed to treat its customers fairly.”

Acting chief executive of Clydesdale and Yorkshire, Debbie Crosbie, was forced to issue an apology to customers.

She said: “In 2011 we introduced changes to our policies and procedures that were designed to help us respond to PPI complaints. A number of these changes were inappropriate and have disadvantaged some of our customers. We got this wrong and I am sorry for that.

“We deeply regret any instance which led to the Financial Ombudsman Service receiving incorrect or incomplete information from us. These practices were not authorised or condoned by the banks. As soon as this issue was discovered, we took immediate steps to stop it; we made the regulator aware and rapidly introduced strict new monitoring procedures to prevent any recurrence.

“Customers should be treated fairly and their interests always safeguarded. When we announced last August that we were subject to an enforcement process with the FCA in relation to the weaknesses in our historical PPI complaint handling, we had already taken significant steps to address them fully and properly.

“As a result, we have put this right for all new complaints handled since August 2014 by introducing a comprehensive new PPI complaint handling process and we are fully committed to fixing this for all cases reviewed in the past. A pilot programme is currently underway and a full review of these past PPI complaints will begin in June to ensure we achieve fair outcomes that every customer can trust.”

The Banks announced last August they were subject to an enforcement process with the FCA in relation to this matter.

Provisions were increased by £420m in the last financial year in anticipation of increased redress costs. Total provisions for PPI redress of £806m were stated in the annual accounts.

The bank said: “The full cost will not be known until the review of past cases has been completed and there remains a wide range of uncertain factors relevant to determining the total costs associated with PPI related matters.”

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