Bank of Scotland plc

On 19 October 2012, the FSA issued a Final Notice to Bank of Scotland. This outlined: the imposition of a financial penalty of £4.2 million pursuant to s206 of the Financial Services and Markets Act 2000 (the Act). Bank of Scotland breached Principle 3 because it held inaccurate records for 250,000 of its Halifax mortgage customers. This was a result of mortgage information and documentation being administered by two separate systems which were not synchronised and, in particular circumstances, required manual updates. The incorrect information was held for considerable periods of time in the period 2004 - 2011 and resulted in Halifax mortgage customers not receiving important updates about changes to their mortgage terms and conditions. 3. As a consequence of the inaccurate information held, the Firm failed to properly apply a Voluntary Variation of Permission (VVOP) by excluding a category of customers who were due redress. The VVOP required BOS to implement a redress programme to make goodwill payments to Halifax mortgage customers in recognition that they may have received potentially confusing information relating to the application of a Standard Variable Rate Cap to their mortgages. 4. The FSA identified this while monitoring a consumer forum website and found a number of instances of customers complaining that they had been wrongly excluded from the redress programme and had not received goodwill payments. The problem was exacerbated when BOS incorrectly contacted 33,700 customers who should not have been included in the programme, and mistakenly made goodwill payments totalling £20.4 million to 22,700 of them. 5. The FSA considers that a financial penalty of £4.2 million (reduced from £6 million after applying a Stage 1 discount) is justified.