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Co-op Bank fined £113,000 over PPI delays

Co-operative Bank, the 'ethical' bank trying to become the fifth force in British banking, has been fined for putting customer complaints about PPI insurance on hold.


by Michelle McGagh on Jan 04, 2013 at 12:49

Co-op Bank fined £113,000 over PPI delays

Co-operative Bank, the 'ethical' bank attempting to buy more than 630 branches from Lloyds, has been fined £113,300 by the City regulator.

The Financial Services Authority said the the Co-op had failed to process payment protection insurance (PPI) complaints from its customers fairly and quickly.

It put customer complaints on hold while its trade body, the British Bankers’ Association, made an unsuccessful legal challenge against the FSA's rules on how banks should deal with PPI cases.

This went against an instruction from the FSA which had previously written to banks telling them to continue processing PPI claims while the BBA challenge was on-going.

The letter also set out what types of complaints should be processed and warned that enforcement would be taken against banks that did not treat complainants fairly.

The FSA said that in the first half of 2011 Co-op had unfairly delayed a ‘significant proportion’ of 1,629 complaints from its customers over PPI cover they had taken when borrowing money from the bank.

Tracey McDermott, FSA 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.’

McDermott said no complainants had suffered any financial loss but ‘Co-op’s actions meant that a significant number of people had the resolution of their valid complaints delayed for not good reason’.

In a statement, the Co-op said its behaviour had 'fallen short of the high standards rightly expected of us’ and said it would not happen again.

Co-op Bank is the banking and insurance arm of the Co-operative Group, which prides itself on an ethical approach to customers and business. Last year it agreed to buy nearly 5 million customers from Lloyds for the knock-down price of £350 million, after the bank was ordered by European regulators to dispose of more than 630 branches in return for its bailout by the UK government in 2008.

If completed the deal would make the Co-op the country's fifth biggest bank. However, recently there have been reports that Co-op and Lloyds are struggling to complete the transaction because of technical difficulties involved in the transfer.

So far banks have paid around £7.5 billion in compensation to customers who were required to take the costly and often ineffective insurance with their loans. Analysts reckon the bill could exceed £10 billion. Last year Co-operative bank set aside another £40 million, taking its total PPI provisions to £130 million.   

8 comments so far. Why not have your say?

martyn of sheepy

Jan 04, 2013 at 16:02

Despite this, the bank is still the best for service and its ethical stand. This fine is nothing compared to the millions the 'big four' rubbish banks have been fined lately for their misdemeanors and money laundering.

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Jan 04, 2013 at 16:28

Citywire Please eliminate the pop ups.

As for the Co-op, well, they are no different from any other bank. My experience of them is that they are, if anything, more difficult than others, with the bureaucracy, even when they know who you are insist paperwork on each and every occasion, and unless and until you produce it, they sit on your money, citing regulation.

They want the 'i's precisely dotted and the 't's precisely crossed. It also appears that their comprehension of English is somewhat lacking, even though they appear to be able to read.

The other one that is more difficult is Barclays, and the FSA used to give them preferential treatment on complaints. Is that why they are paying Sants so much? A reward?

A bank is a bank is a bank!

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Jan 04, 2013 at 17:15

I agree with Snoekie. The Co-op is a bank, and a bank is a bank is bank. Call me an old cynic if you will, but I don't think it's much better than many others and its rather po-faced stance on ethics makes me uncomfortable, if not suspicious. This was plain old bad behaviour and they deserved the fine - and their behaviour was perhaps all the worse as it seems to have been inspired by a self-righteous certainty that they could do no wrong.

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Jan 04, 2013 at 17:32

It is no good, fining the banks they must fine the directors and claw some of their obscene bonuses back.

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Alan Tonks

Jan 04, 2013 at 18:33

Martyn of Sheepy

Please get real the Co-op Bank has as many ethics as all the other banks, none.

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andrew sutherland

Jan 04, 2013 at 19:22

£113k? as if that will really hurt and make them learn.

I suppose the only saving grace is that it is 113k less from a donation to Labour.

by the way, where does the money from the fine go? Does anyone know?

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Dislexic Landlord

Jan 05, 2013 at 11:12

Ive banked with the Coop for a very long time

I think they are better than most

But they have moved away from there roots

Branches have closed down Handybanks have gone and have been Replaced by the post office who give coop customers a very poor service

I know there buying ex Lloyds Banks but there still out of touch with the personal touch

Ive moved 99% of my money from the coop to nationwide andits nice to get to know bank staff who smile and greet you

Ive asked the Coop to change there 0845 customer number it cost s me over 20per min to call them from a Mobile

Guess what they say it cant be changed they are really just like any other bank

But they could lead the way think outside ofthe box and show the Banking world they are indeed differant

I will not hold my breath

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David Walters

Jan 10, 2013 at 18:27

Britannia, part of Coop Bank, have failed to deal with a complaint made as long ago as August. The grounds of complaint - they have "lost" a cheque I sent them to top up and roll over a maturing 1 year fixed bond (although I hold a copy of the cashed cheque duly endorsed "Cooperative Bank"). Britannia used to be so sound. Is it a reasonable assumption that this new schlerosis may have its roots in the Coop`s trimming of resources? Lloyds` customers be warned.

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