Abbey to review complaints

BANKING group Abbey will be forced to review tens of thousands of endowment mortgage complaints in one of the toughest rulings handed down by the Financial Services Authority.

The ruling, expected within the next few weeks, could reopen claims for thousands who have previously been told by the bank that they had no right to compensation.

Senior sources say the decision is intended as a warning to the entire financial services sector that consumer complaints must be treated seriously or heavy penalties will follow.

The move will come as a huge blow to Abbey's new Spanish owner, Banco Santander, which is attempting to cut costs at the bank and improve its battered image.

Abbey has been under investigation by the FSA since November and Financial Mail revealed last month that the watchdog will fine the bank heavily for its ' shambolic' handling of mis-selling complaints.

Abbey has refused to reveal how many complaints it has received and how many it rejected. The bank was one of the biggest sellers of endowments through its insurance businesses Scottish Mutual, Scottish Provident and other companies.

Industry sources estimate that if Abbey's rate of complaints and rejections is in line with other endowment sellers, up to 30,000 complaints could now be re-examined.

A source close to the regulator said the requirement to review its complaints would be a far greater burden on Abbey than any cash fine, heaping extra costs, and public humiliation, on the group.

The FSA declined to comment on the case other than to confirm that forcing a review of past endowment complaints was a sanction it could impose.

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