Direct Line and Churchill Insurance, both subsidiaries of the Royal Bank of Scotland, have copped £2.17 million in fines from the FSA for altering files they were asked to inspect.
Of the 50 files the FSA requested for review, 27 were altered before submission because the firms had “failed to act with due skill, care, and diligence,” the authority said. The majority of the changes were only minor and there were no customers effected by the incident.
“This is a serious breach,” said Tracey McDermott, the FSA’s acting director of enforcement and financial crime.
“The Firms’ attempt to ensure that complete files were provided to the FSA backfired. The Firms failed to give clear instructions resulting in staff making inappropriate alterations with one individual even forging the signatures of colleagues.
“The Firms’ management did not know what changes had been made or when.”
What happened?
In May 2009 the FSA noticed a number of areas where improvements were needed in the firms complaints handling capabilities. Because of this the FSA warned the firms that it would be undertaking a more thorough review of the situation.
To prepare for the review the firms hired a major accountancy firm to do a mock review. 28 per cent of the 110 complaint files failed the assessment.
To rectify this problem, the companies initiated their own internal review of complaint files.
In April 2012, the firms submitted 50 files to the FSA for review. At the same time the FSA received information that the files may have been tampered with. With this tip-off, the FSA visited the firms offices at short notice. After an investigation conducted by the firms, the 27 tampered files and 7 forged signatures were revealed.
The Firms agreed to settle the case at an early stage and therefore qualified for a 30 per cent discount. Without the reduction the FSA would have fined them £3.1 million.
McDermott added, “The significant penalty is however intended to underscore to firms that it is of critical importance that material provided to the FSA must reflect the picture as it is – not as they might like it to be.”
