LONDON (Reuters) - The Financial Services Authority said on Friday it had fined The Co-operative Bank 113,300 pounds for failing to handle complaints regarding payment protection insurance properly.
The FSA said the Co-op incorrectly put on hold complaints over the mis-selling of the loan insurance during an unsuccessful High Court challenge by the British Bankers Association to FSA measures which were designed to ensure PPI complaints were dealt with fairly.
Co-op stopped dealing with the cases despite the FSA making it clear to the industry in a letter dated January 21, 2011, that claims should be progressed normally while the legal action was ongoing, the FSA said on Friday.
The FSA said it was likely Co-op unfairly put on hold a significant proportion of 1,629 complaints between January 21 and May 9 of that year.
“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,” the FSA said in a statement.
PPI was meant to protect borrowers who found themselves out of work because of sickness or redundancy but was often sold to customers who would have been ineligible to make a claim.
Britain’s biggest banks have already set aside over 12 billion pounds to compensate customers.
Reporting by Matt Scuffham