25th May 2011
The bank received more than two and a half thousand complaints between 30 July 2007 and 31 October 2009 regarding sales of its Collective Investment Plan, Personal Investment Plan, Guaranteed Growth Bond, ISA Investor and Guaranteed Investment Plan, according to reports in the Wall Street Journal.
A significant proportion of these were, wrongly, rejected by the bank, with an internal review revealing that 45% of complaints that were rejected should have been upheld.
The FSA's investigation found that many complaints were not adequately investigated and all relevant customer information was frequently not taken into account.
In addition, the FSA found that complaints were not handled competently or fairly and that Bank of Scotland failed to analyse the root causes of its many complaints.
Customers whose complaints were upheld following the internal review have received, to date, £2.4m in compensation from the bank, with a further £15m expected to be paid out following further reviews.
As Jeff Prestridge, editor of the Financial Mail on Sunday and one of Mindfulmoney's bloggers, says: "The financial services industry has much to do if it is to rid itself of its horrible reputation for persistent mis-selling and dire complaints handling.
"The latest annual review from the Financial Ombudsman Service confirms the current appalling state of affairs. In the year to April, more than 206,000 new cases were taken up by the FOS, a 26 per cent increase on the previous 12 months, with 51 per cent of them settled in favour of the consumer."
Tracey McDermott, the FSA's acting director of enforcement and financial crime, stated that the fine reflected the bank's serious failure to treat vulnerable customers fairly.
This follows news that ratings agency Moody's has put the ratings of 14 UK financial institutions under review citing its belief that in future they will no longer receive cash injections from the UK Government.
To receive our free weekly email sign up here.