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FSA fines Co-op over PPI

Robyn Hall

January 4, 2013

During the British Bankers Association’s unsuccessful High Court challenge of new FSA measures designed to ensure all PPI complainants are treated fairly, Co-op incorrectly put on hold PPI complaints that were capable of being progressed.

Tracey McDermott, the FSA’s director of enforcement and financial crime, said: “The FSA 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.

“Despite this warning Co-op put in place a policy that was likely to lead to complaints not being dealt with properly during the legal proceedings.”

In a letter to the industry, dated 21 January 2011, the FSA said that many claims could be progressed normally while the judicial review was in progress. The letter also set out the types of cases that should be progressed.

It contained no new requirements and was simply a reminder of all firms’ complaint handling obligations and the FSA’s expectations.

The letter also warned that enforcement action could be taken if firms failed to treat complainants fairly.

The FSA found that between 21 January 2011 and 9 May 2011 it was likely that Co-op unfairly put on hold a significant proportion of 1,629 complaints incorrectly deciding that they could not be determined because the outcome of the judicial review would have a bearing on the final decision.

The FSA’s own review of a sample of the complaints put on hold revealed that 100% of the cases examined could have been progressed.

McDermott said: “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.We will continue to take action where we find PPI customers have not been treated fairly.”

In a statement the Co-op said: “The matter relates to the period prior to the conclusion of the judicial review brought by the BBA for the purposes of clarifying the standards for assessing PPI complaints. The Co-operative Bank recognises that during the relevant period it put some complaints on hold which were capable of being progressed without waiting for the judicial review to be concluded.

“Our strong reputation within the banking sector has been built upon doing the right thing by our customers but in this instance our procedures have fallen short of the high standards rightly expected of us.

“As the FSA has recognised, no customers have suffered any financial detriment. However 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.”


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