The Financial Services Authority (FSA) has fined The Co-operative Bank (Co-op) £113,300 ($180,000) for failing to handle payment protection insurance (PPI) complaints fairly.

During the British Bankers Association’s (BBA) unsuccessful High Court challenge of new FSA measures designed to ensure all PPI complainants are treated fairly, the Co-op incorrectly put on hold PPI complaints that were capable of being progressed.

The Co-op put these complaints on hold despite the FSA telling the industry that many claims could be progressed normally while the judicial review was in progress.

The letter warned that enforcement action could be taken if firms failed to treat complainants fairly.

The FSA’s own review of a sample of the complaints put on hold revealed that 100% of the cases examined could have been progressed.

Tracey McDermott, the FSA’s director of enforcement and financial crime, said: "The FSA made it clear that firms must continue to process complaints where possible during the judicial review and we warned that enforcement action could be taken if this was not done. Despite this warning Co-op put in place a policy that was likely to lead to complaints not being dealt with properly during the legal proceedings.

"While nobody suffered any financial loss, Co-op’s actions meant that a significant number of people had the resolution of their valid complaints delayed for no good reason. We will continue to take action where we find PPI customers have not been treated fairly."