The Financial Services Authority (FSA) has fined the Co-op bank for failing to handle complaints about the Payment Protection Insurance (PPI).
The bank will be forced cough up £113,300 after it was accused of unfairly putting on hold 1,629 complaints in the first half of 2011 while the banking industry was in the High Court challenging the FSA's new rules.
The FSA's rules were designed to ensure PPI complaints were dealt with fairly.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The Co-op admitted it had put complaints to one side until the court case was lost.
"In this instance, our procedures have fallen short of the high standards rightly expected of us," a spokeswoman said, according to BBC News.
"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."
The FSA had pressed firms to continue processing complaints during the judicial review, warning legal action would be taken if they failed to comply.
However that didn't stop the bank from delaying complaints during legal proceedings.
"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," Tracey McDermott, the FSA's director of enforcement and financial crime, said.
A number of other banks which used the same practice are expected to get hit with a similar fine.
RD
-
UK-US trade deal announced: US cuts tariffs on UK car imports to 10%Keir Starmer and Donald Trump have announced a UK-US trade deal, but the US president has refused to lift baseline tariffs on most UK goods. What does it mean for the UK?
-
How to use mid-caps to diversify from the USMedium sized companies are overlooked by investors but could offer an attractive ‘sweet spot’. We consider the case for mid-caps amid market volatility.
