The Financial Services Authority (FSA) has fined the Co-operative Bank £113,300 for "serious failings" in its handling of complaints arising from sales of Payment Protection Insurance (PPI).
The FSA found that the Co-op's process for dealing with PPI complaints during a judicial review into the issue was inadequate and was likely to lead to a failure to identify complaints capable of being progressed during that period.
As a result, Co-op incorrectly stayed PPI complaints that were capable of being progressed, the FSA said.
Co-op also failed to send a final response to some complainants within the eight-week timescale stipulated under the FSA's regualtions for dealing with disputes.
Because of this the Co-op Bank failed to pay due regard to the interests of its customers and treat them fairly, the regulator said.
These failings were deemed particularly serious because the FSA had written to the Co-op along with other PPI distributors laying out the circumstances under which claims should be handled during judicial review, the regulator said.
The FSA said its letter "should have prompted Co-op to review its policy" and consider whether changes needed to be made.
In fact, Co-op reviewed its policy and decided no amendment was required notwithstanding the contents of the FSA letter.
As a result the FSA said it is likely that a significant proportion of the complaints received during the period it reviewed were delayed without appropriate justification.
The British Bankers Association (BBA) lost a High Court judicial review against FSA guidance on PPI mis-selling complaints last April.
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