The Co-op delayed dealing with a series of payment protection insurance complaints in 2011 despite being instructed otherwise by the FSA
The bank, which is emerging as the fifth force on the high street after a deal to take on 4.8 million customers from Lloyds, put the complaints on hold in 2011 during a court case launched by the British Bankers’ Association against the FSA.
But the FSA said the Co-operative, best known for its ethical banking values, could have progressed the cases as normal during the judicial review.
“Co-op put these complaints on hold despite the FSA making it clear in a letter to the industry, dated 21 January 2011, that many claims could be progressed normally while the judicial review was in progress,” the FSA said. 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 the Co-op unfairly put on hold a significant proportion of 1,629 complaints. The FSA’s own review of a sample of the complaints revealed 100% of the cases examined could have been progressed.
Tracey McDermott, FSA director of enforcement and financial crime, said: “Despite this warning the Co-op put in place a policy that was likely to lead to complaints not being dealt with properly during the legal proceedings.
“While nobody suffered any financial loss, the Co-op’s actions meant 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.”
A Co-operative Bank spokesperson said: “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 there was an unnecessary delay created for some of our customers, including the small sample of cases reviewed by the FSA.”
They added: “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”.