TENS of thousands of Clydesdale Bank customers whose claims for payment protection insurance (PPI) compensation were rejected are in line for payouts, as the bank introduces a new handling procedure under orders from the regulator.
Clydesdale has recruited a large number of staff on a 24-hour shift system to process a surging number of new and previously rejected complaints, following year-long scrutiny by the Financial Conduct Authority (FCA).
David Thorburn, Clydesdale chief executive, said: "We will be revisiting any past complaints which require it, which is a very significant number. Customers don't need to do anything, we will be in contact with them.
"It is going to take some time to do, and the process will take a while, but we will be in touch with anyone we believe has been unfairly treated as a result of our previous policy." He said an enforcement fine from the FCA was "a distinct possibility".
The bank's estimated compensation bill to date of £811 million dwarfs last year's Clydesdale profits of £127m. Its provisions are about the same as those of Santander, which made a £1.6 billion profit in the UK last year, and almost five times the £173m bill for compensation at Nationwide building society, which made a £677m profit. The average PPI pay-out is said by the financial ombudsman to be £2,700, implying customer pay-outs in six figures.
Mike Begg, founder of Dundee-based claims company Beat the Banks, said: "For a bank of that size it is a huge amount. The new staff are working nightshifts just now in a new claims administration department."
Mr Begg said he had just won compensation for a client after "writing four or five times asking for their file and getting nowhere", and had in six cases recently won claims on loans dating back to 1991. Mr Begg added: "Previously they said they did not have the records."
Last October The Herald uncovered evidence from several reputable Scottish claims companies that Clydesdale was the only major bank claiming to be unable to provide customer account records dating back more than six or seven years, "due to the passage of time", thus rejecting large numbers of claims out of hand. It said records were destroyed in accordance with a "data protection principle".
However, the claims firms said RBS, Lloyds/Bank of Scotland and Nationwide were able to provide customer account details going back to 1998 or earlier, enabling any claims to be properly assessed. Beat the Banks asserted that Clydesdale did in fact hold the records, many on computer, and all on microfiche going back as far as 21 years
A year ago Payment Protection Partnership in Paisley claimed Clydesdale would "do all it could to avoid settling claims" while solicitors Carr Berman Crichton in Glasgow said they had filed "hundreds of complaints" to the FCA about the bank's handling process.
Stewart Hosie MP, an SNP member of the Treasury Select Committee, called for a probe.
Clydesdale at first said its procedures were under review with the FCA, then last February admitted that it did "hold historic records that may go back 21 years, but not in all cases" and accepted that its approach had been "inconsistent".
In August the bank's Australian parent NAB said the Clydesdale and Yorkshire banks would have to make new provisions for customer PPI redress of £75m, taking the total to £461m. It also warned "significant additional provisions" would be needed due to revamping its complaint handling process, which would unleash a wave of payments for new complaints and previously closed complaints, as well as a need to re-examine old customer records.
Then three weeks ago NAB added another £345m to the £75m, and revealed it had to "extend our examination of historical records dating back to pre-2000 periods, including unindexed microfiche records". Clydesdale Bank was said to be "subject to an enforcement process with the FCA in relation to its previous PPI complaints handling process".
Mr Begg said he had been supplying the FCA with information for over a year and was surprised the regulator had not as yet made any statement on the issue.
He said: "Banks have a duty under the FCA rulebook to go back and find the start of any claim, and if you have the microfiche it is not that difficult. Now the bank would have us believe that to trace client loans back to 1991 they are looking at microfiche but I don't necessarily believe that, I think it may still be held on computer."
Former Clydesdale banker Mr Begg says banks generally hold account records on computers so it is not an issue of paperwork being destroyed.
The FCA has previously said it expects banks to retain adequate records for as long as possible, relevant to the purposes for which they are made, to deal with requests for information, and to treat customers fairly regardless of what records they choose to retain.
Mr Thorburn said this week: "Nearly all banks have (record) retention policies. I'm not sure if we were that different to other organisations, but having said that there are aspects of our complaint handling we got wrong and we are putting it right in conjunction with the regulator."
If you can't find paperwork but suspect you were sold PPI in the past then you don't need a claims firm, according to consumer groups. Instead, write to the bank and request a list of your historic accounts and products.
Template letters and questionnaires are available from Which? (which.co.uk) or the ombudsman (financial-ombudsman.co.uk).
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article