Clydesdale taking up to 7 months over PPI claims as backlog battle continues

The persistent failure of the bank to address its issues in dealing with the legacy of PPI misconduct now looks set to cast a shadow over Clydesdale’s looming flotation which has been pencilled in for February.

According to the local Herald newspaper, the Glasgow-based lender is still taking up to seven months to respond to PPI complaints, despite having recruited a large number of employees on a 24-hour shift system to process new and previously rejected PPI complaints following intervention by the Financial Conduct Authority.

The lender is also accused of blocking PPI complaints from claims firms months after they were submitted, by last-minute rejection of letters-of-authority.

The sell-off of Clydesdale next year by parent National Australia Bank will be carried out with an indemnity of up to £1.7billion provided to cover potential misconduct liabilities.

Last April the bank was fined £21.7m by the FCA for complaint handling defects. The bank said a year ago that a plan had been put in place in August 2014 “to respond to cases within the statutory time frame”.

Glasgow businessman Gordon MacLennan, who submitted his claim for mis-sold PPI on July 26 this year told the newspaper that he has been contacted by the bank and informed that he is to expect a “final response no later than February 29, 2016”.

Mr MacLennan said: “If the FCA set the deadline what are they doing about the continued failure of the bank to meet it? I feel I now have no choice but to refer my claim to the ombudsman, which obviously creates additional work for everyone involved.”

A spokesman for the FCA said: “Firms have eight weeks to respond to a complaint. A firm that takes longer than this must provide a full explanation for the delay. At this point, the customer is able to take their complaint to the Financial Ombudsman Service.”

Mike Begg, the former Clydesdale banker who runs claims firm Beat The Banks, said almost all his PPI claims included customers’ signatures and ID as required, and validated on receipt, by the bank.

“It is then hard to believe that we are at the very last minute told our mandate is ‘invalid’, Invariably, this is happening months after a case has been submitted and following a flow of letters from the bank to us advising a final decision is delayed.”

The FCA spokesman said: “We remain vigilant for any new issues that arise concerning firms’ handling of PPI complaints, will act quickly to fully understand them and, where necessary, intervene to make sure consumers get a fair deal.” He could not comment on individual firms.

A spokesman for Clydesdale Bank said: “The work required to reduce backlogs has been well publicised and, while our position is improving, our priority remains ensuring fair outcomes for customers.

“Our procedure for letters of authority is there to protect customer confidentiality … but this does not delay the customer receiving their outcome.”

He went on: “Our provisions are based on a number of factors, including the experience of actual redress paid to customers, and do not assume they would all take a five-year fixed rate. We have total cover of £2.1bn across provisions and conduct indemnity, including substantial unutilised provisions of £986m in place to cover legacy conduct costs.”