Allied Dunbar fined £750,000

13 April 2012

HUNDREDS of customers of Allied Dunbar, whose complaints of endowment mortgage mis-selling were rejected, are to have their claims re-investigated after the company was fined £750,000 by the country's chief financial watchdog.

The Financial Services Authority said Allied Dunbar was guilty of 'serious flaws' in its procedures for handling mortgage endowment complaints, which exposed a large number of its customers to potential loss.

The flaws identified occurred between May 2001 and April 2003. Allied Dunbar is now reviewing complaints rejected from January 2000 and April 2003, including around 1,000 endowment complaints that were rejected during the period of breach and which in practice is the number of customers who may have suffered loss.

The FSA said: 'Important parts of the firm's guidance issued to its staff on the operation of its complaint handling procedures were inadequate.'

In a number of the complaint cases examined by the FSA complaint handlers had conducted poor quality investigations and there was a failure to gather sufficient evidence to make a fair assessment of both the consumer's attitude to the risk and the suitability of the sale.

Andrew Procter, FSA's director of enforcement, said: 'The fair treatment of customers does not begin and end at the point of clinching a sale. It applies to all aspects of the relationship between firm and customer including the fair handling of a customer complaint. Where firms do not deliver the required standards and fail to treat their customers fairly we will intervene.'

Allied, part of the Zurich Financial Services group, has sold 293,000 mortgage endowments since 1988. It has now introduced new complaints procedures.

In December 2003 the FSA fined Friends Provident Life and Pensions Limited £675,000 for mis-handling of mortgage endowment complaints. Five other firms have been fined £5.2m in relation to mortgage endowments. There are also a further 19 firms, who have not been publicly disciplined, who are reviewing their sales of mortgage endowments.

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