Tag Archives: Coop Bank

Programming Error Costs Co-Op Bank £110m

The Co-Operative group has been dragging its name through the mud again recently, adding to the mess that has already been made during the most turbulent period in the group’s history. This particular episode comes again from the Co-op Bank, which has come in for particularly heavy criticism recently following a series of revelations.

An extract from the bank’s financial report for 2013 states interest refunds relating to technical compliance with the Consumer Credit Act have also been provided for 110m. It is suspected that this refers to a group of annual loan statements that were distributed 368 days after the previous annual statement. This error has been blamed on a coding error, which was programmed to automatically generate the reports, but did so 3 days late.The bank has yet to confirm the cause of the late report, but a report by The Grocer strongly suggested that a coding error was to blame.

The reason the figure of 110 million is a “refund”, and not a fine relates to the statements being released 3 days late. In this case, the law states that all interest earned by the Co-op Bank during this period now has to be refunded because the statements were released after the 365 day period. It’s a technicality, but it’s a mistake that has cost the already cash-strapped bank a huge amount of money. It also makes the already slippery slope to recovery even more slippery.

The bank had already reported losses of 1.3 billion for 2013, and has barely been out of the news over the last few months since the highly public shaming of former boss Paul Flowers for “lavish” expenses as well as “inappropriate content“. Flowers resigned his post in June 2013, followed by the Co-op group chairman Len Wardle in November of last year. Even more recently, Lord Myners, who was brought in by the Co-op board to turn things around at the beleaguered group, resigned only a few weeks ago amid expectation his plans for reformation of the group’s board and management structure were to be rejected.

 

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