Clydesdale fined £20.7m over PPI
Clydesdale Bank has been fined a record £20.7 million for "serious failings" in the way it handled payment protection insurance (PPI) complaints.
The Financial Conduct Authority (FCA) said staff from the Glasgow-based lender failed to take into account all relevant documents when deciding how to deal with complaints.
It also provided false information to the Financial Ombudsman Service in response to requests for evidence of the records Clydesdale held on PPI policies sold to individual customers.
The matters relate to complaint handling processes between May 2011 and July 2013 and have resulted in the largest ever fine imposed by the FCA for failings relating to PPI.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: " Clydesdale's failings were unacceptable and fell well below the standard the FCA expects.
"The fact that Clydesdale misled the Financial Ombudsman by providing false information about the information it held is particularly serious and this is reflected in the size of the fine."
The failings also relate to Yorkshire Bank, which is a sister business of Clydesdale within parent company National Australia Bank
Out of 126,600 PPI complaints decided between May 2011 and July 2013, up to 42,200 may have been rejected unfairly and up to 50,900 upheld complaints may have resulted in inadequate redress for customers.
The banks are now reviewing all PPI complaints handled prior to last August and have offered redress to any customers impacted by the failings.
Clydesdale's acting chief executive Debbie Crosbie 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."
The FCA said that staff would not search for documents if they fell outside Clydesdale's seven year document retention period policy, even if they were still readily available.
And when calculating redress for credit card PPI complaints, handlers ignored statements that Clydesdale held for the period before 2000.
The FCA also found that complaint handlers were failing to identify cases where the PPI policy sold was unsuitable for the customer.
Clydesdale said that members of one team within the PPI operation - without knowledge or authorisation of the banks - made alterations to some documents and information provided to the Ombudsman.
National Australia Bank recently increased its provision to cover PPI complaints by £420 million in anticipation of higher redress costs.
It said in October that total provisions for PPI redress were £806 million, with £291 million having been utilised.
The full cost will not be known until the review of past cases has been completed.