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BoS investors set for £17 million compensation

BoS investors set for £17 million compensation

Category: Investments

Updated: 25/05/2011
First Published: 25/05/2011

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Bank of Scotland (BoS) customers whose complaints about their investments were wrongly rejected by the bank are to receive around £17 million in compensation.

The Financial Services Authority (FSA) has also fined the bank £3.5 million for mishandling complaints about retail investment products, many of which were from older customers with little or no experience of investment products.

The bank received 2,592 complaints about sales of the Collective Investment Plan, Personal Investment Plan, Guaranteed Growth Bond, ISA Investor and Guaranteed Investment Plan between 30 July 2007 and 31 October 2009.

However, the regulator found that the bank wrongly rejected a significant number of these complaints.

The FSA said complaints had not been investigated properly, and that poor decisions were made on whether the investments were suitable for the customers who complained.

The bank has so far paid £2.4 million in compensation to customers whose complaints were upheld following its own internal review.

However, following the FSA's findings, it is expected that further compensation of around £15 million will be paid to customers in light of further reviews which must now be completed.

"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.

"The firm's failure to ensure it had a robust complaint handling process in place led to a significant number of complaints being rejected when they should have been upheld."

Confirming the bank has since improved its complaint handling arrangements, the FSA said it is also carrying out a review of advice-related complaints that it rejected between 1 February 2004 and 31 December 2009.

The bank has also agreed to carry out a review of its sales of investment products to around 8,000 customers who were classified as having a cautious attitude to investment risk under the firm's risk profiling tool in use from 30 July 2007 to 1 March 2010.

All of the customers whose complaint or sale will be reviewed have been identified and will receive compensation if appropriate.

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