The Co-operative Bank’s legal risk expenditure almost doubled in 2015 mostly to address issues caused by the mis-selling of payment protection insurance.
The challenger bank’s conduct and legal risk costs shot up 91% from £101.2m in 2014 to £193.7m in the last year, which according to the bank, related to ‘legacy issues’.
The bank’s annual report and accounts for 2015 showed that £71.8m of the charge comprised of increases for PPI complaints, and that £58.3m was used for CCA unsecured unenforceable interest or the wrongly charged interest that it was forced to return to consumers, and a further £40.4m to redress customers.
The bank also incurred a £58.3m cost relating to unenforceable interest, and a further £98.7m increase in the CCA conduct provision.
The charge increases come as the bank’s annual pre-tax losses have more than doubled to £610m up from £264m in 2014.
The in-house legal team at the bank is led by the former interim general counsel of Coventry Building Society Brona McKeown, who took over from former Allen & Overy (A&O) partner Alistair Asher in 2013, after he was appointed to head the legal function across the entire Co-operative Group. McKeown’s team comprises 21 lawyers including deputy GC Claire Morris who joined from Nationwide Building Society last year.
In September last year, the bank appointed 11 firms to form its legal supplier three-year panel with firms like Clifford Chance, A&O and Pinsent Masons winning places after a competitive tender.
For more on financial regulation and litigation see: ‘The end of the tunnel – litigation and regulatory challenges in financial services’