FSA fines Abbey £800,000 for endowment mis-handling

The FSA has fined Abbey National plc £800,000 for mishandling mortgage endowment complaints and for providing inaccurate and potentially misleading information.

The FSA discovered that, between October 1st 2001 and September 30th 2003, Abbey mishandled around 5,000 complaints, including 3,500 that were rejected when they should have been upheld. Based on industry averages, losses of up to £19 million may have been caused to those 3,500 customers. During this period, the firm received 37,453 mortgage endowment complaints and, of the 20,044 cases, rejected 18,593 complaints (approximately 93 per cent).

Between January 1st 2001 and December 31st 2004, Abbey received in the region of 65,000 endowment complaints. Investigation of cases in every quarter of that 4 year period has not taken place - however, the firm accepts it is likely that levels of failure similar to those found between 1 October 2001 and 30 September 2003 occurred throughout the 4 year period.

The FSA has recognised that Abbey co-operated fully and quickly agreed the facts with the FSA so as to enable the settlement of the disciplinary case at an early stage and took this into account when applying the fine. Abbey has also committed to reviewing all mortgage endowment complaints rejected since 1 January 2000 and pay redress where appropriate. The firm has also launched a complete overhaul of its complaints handling procedures. Had Abbey not acted in this positive way, the FSA would have been inclined to impose a far higher penalty.

Clive Briault, the FSA's Director of Retail Markets, said: "By putting its own interests ahead of those of its customers with a mortgage endowment complaint, Abbey has singularly failed to treat its customers fairly. Its failings were made more serious as they occurred at a time when there was a high level of awareness within the industry about mortgage endowments and concerns regarding the fair handling of complaints.

"Abbey would certainly have been in line for a far higher fine had its new owners not acted immediately to ensure that no customers would face loss as a result of its mishandling of complaints. By agreeing to review complaints it has rejected, and by committing to revise its entire complaints handling procedures, Abbey has taken positive steps to prevent its past mistakes in this area being repeated in the future."

May 25, 2005
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