Clydesdale Bank has been fined a record £20.7 million for “serious failings” in the way it handled payment protection insurance (PPI) complaints.
The fine is the largest of its type imposed by the Financial Conduct Authority (FCA) who said as many as 93,000 customers may be entitled to refunds or additional compensation.
The fine relates to a policy change in May 2011, which meant complaint handlers did not take all relevant documents into account when assessing whether customers had been wrongly sold PPI.
The bank, which has 2.5 million customers in the UK, also provided false information to the Financial Ombudsman Service between May 2012 and July 2013.
The Ombudsman had asked for evidence of the records Clydesdale held on PPI policies sold to individual customers.
In a small number of cases, bank employees “altered certain system printouts” to make it look as though Clydesdale held no relevant documents.
They also deleted information about PPI sales from customer records in practices which had not been authorised by managers, the authority said.
Georgina Philippou, acting director of enforcement and market oversight at the 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.”
The failings also relate to Yorkshire Bank, which is a sister business of Clydesdale within parent company National Australia Bank.
Out of 126,600 PPI complaints decided between May 2011 and July 2013, up to 42,200 may have been rejected unfairly and up to 50,900 upheld complaints may have resulted in inadequate redress.
The banks are now reviewing all PPI complaints handled prior to last August and have offered redress to any customers impacted by the failings.
The Clydesdale, which has its headquarters in Glasgow, said 180,000 files were now being reviewed, to see if customers may be due compensation.
Clydesdale acting chief executive Debbie Crosbie said: “In 2011 we introduced changes to our policies and procedures that were designed to help us respond to PPI complaints.
“A number of these changes were inappropriate and have disadvantaged some of our customers. We got this wrong and I am sorry for that.
“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.”
She added: “This has been a very difficult day for the Clydesdale Bank and we want people to understand that we are treating this very seriously.
“We have taken immediate steps to put right what we got wrong.”
The problem was isolated to PPI claims during a specific period, she stressed.
It had no impact on any of the bank’s other activities including the accounts of customers whose support was valued and whom she said they would continue to serve to the highest standards.