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Topics: Bank of Scotland| FSA| fines| complaints handling
The Financial Services Authority (FSA) has fined the Bank of Scotland (BOS) £3.5m for failures in handling customer complains, and secured £17m in compensation for customers.
Many of the complaints related to retail investment products and came from older customers with little or no investment experience, the FSA found.
BOS received 2,592 complaints about its sales between 30 July 2007 and 31 October 2009.
Complaints related to sales of the bank's Collective Investment Plan, Personal Investment Plan, Guaranteed Growth Bond, ISA Investor and Guaranteed Investment Plan.
Of complaints rejected by BOS, 45% should have been upheld, according to the bank's own internal review.
The FSA said the bank failed to investigate complaints properly, without taking into account all relevant customer information.
BOS made poor decisions over whether investments were suitable for customers who later complained, the FSA found.
The bank also failed to analyse trends in its own complaints decisions and those made by the Financial Ombudsman Service (FOS), meaning complaint handlers were not aware of emerging issues, the regulator said.
BOS has already paid £2.4m in compensation to customers whose complaints were held up after its internal review, and it expects to pay out a further £15m in compensation after further reviews.
"This fine reflects BOS's serious failure to treat vulnerable customers fairly," said Tracey McDermott, the FSA's acting director of enforcement and financial crime.
"Had BOS undertaken effective root cause analysis of the complaints it received and had adequate processes in place to feedback lessons learned from past complaints, it could have acted sooner to improve its processes."
The FSA said BOS has improved its complaints handling system, and is carrying out another review of complaints rejected between 1 February 2004 and 31 December 2009.
It will also review its sales of investment products to 8,000 customers classified as having a cautious attitude to risk between July 2007 and March 2010.
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Examle of their internal scrutiny
I successfully helped a client who came to me after investing with this outfit! 2 months after a bereavement and 4 days after the proceeds of his wife's policies hit his account. He was sold 2 identical Investment Bonds(there were 2 for diversification purposes !!!)no suitability letter and a dismissive "we don't actually receive the commission" explanation. Upon complaint they did not meet their own complant procedures timetable, dismissed it, fought against the Ombudsman decision and took over a year to finally settle continuing to protest! This is only one example of the sharp practice and dismissive and cynical approach they have for their 'valued' customers. £3.5m is not enough at least £100 times that would perhaps make a better impression on them. No wonder we advisers get a bad press.
Posted by: Allen Simpson
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Little old ladies
This makes me chuckle - I had a client in to see me two weeks ago wanting a second opinion on what her bank had advised her to do. She was 74, widowed with limited pension income. She had some cash isa's (£10k) and about £25k in cash. That was it no other assets apart from her council house she had purchased at a discount some 20 years ago. After gathering the basic info the bank adviser suggested she move £23k into one of their OEIC's with a selection of equity funds. He also suggested she move the cash isa's into the OEIC as well as the rates on ISA's were so bad at the moment. After I advised her not to do any of what was suggested - especially as she was planning on going to New Zealand to stay with her daugther later in the year and would need around £8k for the trip, was suffering from cancer and unlikely to live more than 3 years - she was very grateful, and her parting comment was - the man in the bank did seem very desperate for me to do this as well. I think that's the point isn't it - too many advisers, too little to go around and desperate sales to hit stupid targets - the sooner the FSA review the banks salary and reward packages the better.
Posted by: Janice Burns