The Financial Conduct Authority (FCA) has imposed its largest ever fine for failings relating to Payment Protection Insurance (PPI).

The regulator has fined Clydesdale Bank Plc £20,678,300 for serious failings in its PPI complaint handling processes between May 2011 and July 2013.

In mid-2011 Clydesdale implemented inappropriate policies which meant that its PPI complaint handlers were not taking into account all relevant documents when deciding how to deal with complaints.

In addition, between May 2012 and June 2013, Clydesdale provided false information to the Financial Ombudsman Service in response to requests for evidence of the records Clydesdale held on PPI policies sold to individual customers. A team within Clydesdale’s PPI complaint handling operation altered certain system print outs (in a small number of cases) to make it look as if Clydesdale held no relevant documents and deleted all PPI information from a separate print out listing the products sold to the customer. These practices were not known to or authorised by Clydesdale’s PPI leadership team or more senior management.

Georgina Philippou, acting director of enforcement and market oversight at the FCA said: “Clydesdale’s failings were unacceptable and fell well below the standard the FCA expects. The fact that Clydesdale misled the Financial Ombudsman by providing false information about the information it held is particularly serious and this is reflected in the size of the fine.

“We have been very clear about how firms should treat customers who may have been mis-sold PPI. In ignoring documents it held which were relevant to its customers’ complaints, Clydesdale failed to treat its customers fairly.”

As a result of Clydesdale’s conduct, of the 126,600 PPI complaints decided between May 2011 and July 2013, up to 42,200 may have been rejected unfairly and up to 50,900 upheld complaints may have resulted in inadequate redress for customers.

The FCA said Clydesdale’s inappropriate policies meant that, for PPI complaints about loans and mortgages which had been repaid more than seven years prior to the date of the complaint, its complaint handlers would not search for any documents on the basis that they fell outside Clydesdale’s seven year document retention period. This was despite the fact that, in a small percentage of cases, relevant documents had not been destroyed and were still readily available. When calculating redress for credit card PPI complaints, handlers ignored those credit card statements that Clydesdale held for the period before the year 2000.

The FCA also found that complaint handlers were failing to identify cases where the PPI policy sold was unsuitable for the customer, and found deficiencies in the training and monitoring of complaint handlers.

Clydesdale will be reviewing all PPI complaints handled prior to August 2014 and offering redress to any customers impacted by these failings. Customers do not need to take any action – Clydesdale will be contacting all affected customers in due course.

Clydesdale agreed to settle at an early stage of the FCA’s investigation and therefore qualified for at 30% stage 1 discount. Were it not for this the FCA would have imposed a financial penalty of £29,540,500.