Payment Protection Insurance is a big deal today; banks want it dealt with quickly in order to get claims out of the way, having already had to set aside a total of £13bn to pay the claims. However, not all banks are dealing with the PPI claims as they should be; the Co-Operative bank was recently fined due to failure to properly handle the PPI complaints against them.
The entire PPI system is monitored by The Financial Services Authority, which means that when claims aren’t handled properly it is noticed and the FSA, in this case the bank put all PPI complaints on hold in 2011 during a court case launched by the British Banking Association, despite warnings that enforcement action could be taking on any firm that failed to take complaints fairly. This is following the emerge of the co-op bank which has quickly become a competitive force on the high street, having promised to take 4.8 million customers from Lloyds.
Having neglected 1,629 PPI complaints the bank was eventually fined a total of £113,300 due to the fact the bank should have continued to process the complaints as normal like all of the other banks within the BBA did. A spokesperson for the Co-Operative Bank said that while the bank have always worked hard to build and maintain high ethical values their procedures fell short of the high standards expected of them, but they have always strived to do what is right by their customers.
Of course since the court case the complaints that were put on hold have been processed and dealt with appropriately – however it has left some concerns about the bank’s procedures. The FSA received full support from the bank during their investigation and the spokesperson added “We have co-operated with the FSA throughout their investigation and we are confident that this would not occur again if similar circumstances were to arise”.
It is reported that the FSA found all of the complaints put on hold could have progressed and resulted in the customers receiving compensation, and although none of the customers suffered any financial loss the complaints could have been dealt with much sooner than they were had the bank put into place procedures that operated effectively. One director within the FSA said “Despite this warning the co-op put in place a policy that was likely to lead to complaints not being dealt with properly during the legal proceedings”, of course the investigation indicated that this might have been a case of poor management rather than an intention to provide poor service to those submitting complaints during this time period.
Despite the resolution of the issues the bank has been thrown into speculation by some of its customers; the key appeal of the Co-Operative Bank was to be the ethical values, and despite low interest rates many customers from Barclays and HSBC left their bank to join the Co-Op and joining the ‘ethical investment’. These customers are currently disappointed with the actions taken by the Co-Operative bank and one customer posted online ‘just another bank after all’, which could mean a loss in the popularity of the Co-Op bank in the future.