PUT THE BANK CHIEFS IN JAIL
As the Clydesdale is fined £21m over PPI scandal, MPs demand:
A SCOTS bank has been hit with a record £21million fine after falsifying documents to try to avoid compensating victims of mis-selling.
In a cover-up lasting more than two years, the Clydesdale Bank and Yorkshire Bank misled the Financial Ombudsman, obstructing its investigation into payment protection insurance (PPI) complaints.
Rogue staff deleted records and tampered with evidence to make it look like the customer was never sold PPI, or lied about not being able to trace documents.
Last night, MPs called for a police investigation into the wrongdoing, which took place between May 2011 and July 2013,
Labour’s John Mann said: ‘The police or the Serious Fraud Office should look at the evidence because clearly there is a possibility of fraud or forgery which cheated people out of compensation. This behaviour is reprehensible and shows the lengths some banks have been prepared to go to mislead regulators. The police really need to look into this – fines are not enough.’
Clydesdale and Yorkshire are part of the same group, with three million customers
and almost 300 branches. They are owned by National Australia Bank, with the Clydesdale – founded in Glasgow in 1838 – holding the banking licence for both in the UK.
According to the City watchdog, the worst of the cover up – from May 2012 to June 2013 – resulted in up to 42,200 PPI complaints being rejected unfairly and up to 50,900 customers receiving inadequate compensation.
Georgina Philippou, acting director of enforcement and market oversight at the Financial Conduct Authority (FCA), said: ‘Clydesdale’s failings were unacceptable and fell well below the standard the FCA expects. The fact that Clydesdale misled the Financial Ombudsman by providing false information about the information it held is particularly serious and this is reflected in the size of the fine.’
Last night, Clydesdale said it had taken disciplinary action against the staff involved and promised to review 180,000 complaints handled before August last
‘This should be a warning shot’
year. But Tory MP Mark Garnier said: ‘This all took place well after the financial crisis, when banks said they had changed. Clearly they haven’t. It would be unacceptable if criminal charges are not brought against the people who perpetrated this. An example must be set.’
Clydesdale and Yorkshire’s failings were so serious that the £20.7million fine dwarves the next biggest penalty handed out for PPI, which was £7million for Alliance & Leicester in 2008.
The FCA said t he bank launched an ‘inappropriate policy’ for its complaints handling in 2011– instructing staff not to search for PPI complaints relating to loans and mortgages which had been repaid more than seven years prior to the date of the complaint. This was despite the fact that in some cases the relevant documents had not been destroyed.
Clydesdale also failed to trawl back through credit card statements dating before 2000 for customers mis-sold PPI with a credit card. This resulted in some customers being shortchanged on compensation payouts or missing out entirely.
But the wrongdoing escalated in May 2012, when staff started to provide false information to the Financial Ombudsman. This included deleting any reference to PPI on documents. They also tampered with computer records to make it seem documentation had been destroyed.
The City watchdog said management at the bank were not aware this was going on.
But Richard Lloyd, executive director of consumer campaign group Which?, said: ‘These failings add insult to injury for customers who have already been ripped off once. It’s been clear for years that banks should be doing more to resolve the mistakes they’ve made and this fine should be a warning shot for others who still aren’t treating customers fairly.’
Clydesdale has so far set aside just over £800million for customers, of which £291million has been paid out already – with average payouts of £2,900. But its bill is set to spiral as it is forced to revisit 180,000 cases.
Debbie Crosbie, acting chief executive of Clydesdale and Yorkshire Bank, said: ‘We deeply regret any instance which led to the Financial Ombudsman Service receiving incorrect or incomplete information from us. These practices were not authorised or condoned by the banks. As soon as this issue was discovered, we took immediate steps to stop it.
‘We made the regulator aware and rapidly introduced strict new monitoring procedures to prevent any recurrence.’