PPI Lenders And Banks Have Been Fined

The Bank of Scotland has been fined £3.5m, by the FSA, for mishandling customer complaints about the sale of its retail investment products, and also been ordered to pay £17.5m in compensation to its customers. To date, this is the largest ever fine for complaints mishandling and acts as a warning for the banks involved in.

It appears that Payment Protection Insurance isn’t the only product that was mis-sold by the Bank; other investment products Collective Investment Plan, Personal Investment Plan, Guaranteed Growth Bond, Isa Investor and Guaranteed Investment Plan were all mis-sold as well. The Now bank faces yet another humungous job of not only reviewing all 2,592 past sales made between July 30 2007 and 31 October 2009, but having to pay – literally – the penalty for disappointing complaint services.

Bank of Scotland, which is part of the Lloyds Banking Group, had wrongly dismissed up to 45% of complaints that should it should have upheld.  An investigation from the watchdog revealed that complaint handlers fared poorly on making suitability decisions of whether or not the investment was fit for customer, as well as failing  to  check customer information – causing even more complaints.

FSA’s acting director of enforcement and financial crime Tracey McDermott said that the fine only mirrored BOS’s “serious failure to treat vulnerable customers fairly.”

She stated if Bank of Scotland had “undertaken effective root cause analysis of the complaints it received,and had adequate processes for feedback lessons learned from past complaints”

BOS was not the only bank fined, Barclays and JP Morgan also shared the penalty; Barclays was made to pay £7.7 million in Januray due to investment advice failures that involved the transactions of two high risk funds, while JP cashed out £33.3 m for their failure to guard the consumer’s money.

Risk Director of BOS apologized on the behalf of the bank for not giving quality service, and swears to make things straight by fully cooperating with the FSA in order to get into the root of the customer’s problem.

It had promised to review the sales of the investment plans and are currently contacting affected parties to pay them their due. BOS has a mountain of complaints dating back from 2004 to December 31, 2009.

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