Co-op Bank fined £113.3k over PPI claims
FSA says bank stalled on claims processing contrary to instructions
By Gaurav Sharma | CFO UK | Published 14:40, 04 January 13
The Co-op bank has been fined £113,300 by the Financial Services Authority (FSA) for stalling on Payment Protection Insurance (PPI) claims.
In a statement on Thursday, the FSA said that despite being warned the claims processing should continue as normal, the bank put 1,629 complaints on hold in the first half of 2011, while the banking industry launched a legal challenge to the regulator's new rules on PPI.
Tracey McDermott, director of enforcement and financial crime at the FSA, said, "We made it clear that firms must continue to process complaints where possible during the judicial review and we warned that enforcement action could be taken if this was not done."
"While nobody suffered any financial loss, Co-op's actions meant that a significant number of people had the resolution of their valid complaints delayed for no good reason," she added.
As it was standard practice for banks to put complaints on hold at the time, many other banks will in all likelihood suffer similar fines over the coming months. The banks lost their legal challenged in April 2011.
A spokesperson for the bank said, "In this instance, our procedures have fallen short of the high standards rightly expected of us. We accept that there was an unnecessary delay created for some of our customers, including the small sample of cases reviewed by the FSA."
"We have co-operated with the FSA throughout their investigation and we are confident that this would not occur again if similar circumstances were to arise," she added.
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