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Release Date: 4th January 2013

To access the original FSA document, click here.


The Co-operative Bank plc (Co-op) was fined £113,300 by the Financial Services Authority (FSA) for failing to handle customer complaints appropriately, particularly regarding Payment Protection Insurance (PPI) during the period from 21 January 2011 to 9 May 2011. The FSA identified breaches in Principle 6 (Customers’ Interests) and certain rules within the Dispute Resolution: Complaints Sourcebook (DISP).

The backdrop to this action was the judicial review initiated by the British Bankers’ Association and Nemo Personal Finance Limited against the FSA’s new measures on PPI complaint handling, outlined in Policy Statement 10/12. Despite this legal challenge, the FSA issued a letter on 21 January 2011 (the FSA Letter) reminding firms that they were expected to continue processing certain types of PPI complaints that were unaffected by the judicial review.

However, Co-op failed to process complaints that should have been manageable during the judicial review period. Specifically, they did not correctly identify or progress complaints that fell into categories specifically highlighted by the FSA as actionable during this period. This resulted in unnecessary delays and the failure to provide timely responses within the prescribed eight-week period.

The FSA considered these failings serious due to:

In mitigation, the FSA noted that the delayed complaints processing did not ultimately deny consumers redress since Co-op paid interest to affected customers. There was also no evidence of broader systemic issues at Co-op, and the bank cooperated with the FSA during the investigation, which contributed to a 30% reduction in the potential fine.

For other firms, key takeaways include:

Overall, the Co-op’s experience serves as a cautionary tale about the importance of regulatory compliance and proactive customer interest protection, highlighting the consequences of non-compliance and the benefits of early and cooperative engagement with regulatory authorities.

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