FCA hits Clydesdale with record £20.7m fine for PPI failings

The UK's financial regulator has imposed its largest-ever penalty for failings around selling payment protection insurance (PPI), fining Clydesdale Bank £20.7m for failings that included staff falsifying information on its policies.

The Financial Conduct Authority said there were "serious failings" in Clydesdale's handling of complaints relating to its sales of PPI where information on policies requested by the Financial Ombudsman were in some cases altered and deleted.

The bank's senior management did not know this was happening, the FCA said, but it did have inappropriate procedures that stopped staff properly searching for documents.

Clydesdale's PPI complaint handlers, starting in mid-2011, also failed to take into account some relevant documents when deciding how to deal with cases, the regulator said.

"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," said Georgina Philippou, acting head of enforcement at the FCA.

PPI, which banks sold as an add-on to loans, was lucrative for UK banks between 1990 and 2010, but lenders have since been hit with blizzards of complaints from customers who believe they should not have been sold the policies at all, with the FCA then reprimanding banks for how the complaints have been handled.

The regulator's predecessor, the Financial Services Authority, doled out 30 fines for PPI-related issues, both for mis-selling and for failings in complaint-handling processes. Co-Op Bank was fined £113,300 in January 2013 and Lloyds Banking Group £4.3m in February 2013 for failings that delayed customers getting redress for PPI.

Clydesdale Bank apologised to its customers and admitted it "got it wrong."

"We deeply regret any instance which led to the Financial Ombudsman Service receiving incorrect or incomplete information from us," Debbie Crosbie, the lender's acting chief executive, said.

"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."

Banks have set aside a total £806m for PPI complaints, of which £291m had been used as of October last year.

Of the 126,600 complaints decided by Clydesdale between May 2011 and July 2013, as many as 42,200 may have been unfairly rejected and up to 50,900 complaints may not have received adequate redress because of the bank's actions, the regulator said.

The bank will review all PPI complaints handled before August 2014 and offer redress to anyone affected, the FCA said.

Clydesdale received the regulator's standard 30 per cent discount for co-operating with the investigation and settling early.

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

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