CT Capital, the parent company of a group of lenders and loan brokers, was responsible for handling PPI complaints on behalf of the group.
The Financial Conduct Authority (FCA) fined the company for “serious failings” in its complaint handling processes.
According to the watchdog, the mishandling resulted in customers missing out on redress payments to which they were entitled. The average redress payment was £5,959.
The FCA found CT Capital sold 31,591 regulated PPI policies between 2005 and 2008, receiving £63m net in commission.
Later on, the lender failed to place adequate systems for assessing its PPI complaint handling processes and for monitoring the fairness of customer outcomes.
After receiving feedback from the FCA in 2013, CT Capital reviewed 4,800 complaints that had been rejected or not fully compensated.
By January this year, the company had paid £74m in redress related to PPI complaints.
The watchdog found that the lender breached Principles 3 of management control, Principles 6 of customers’ interests and the FCA’s Principles for Business.
CT Capital agreed to settle at an early stage of the FCA’s investigation and qualified for a 20% discount, being imposed a penalty of £2.36m as a result.
Mark Steward, director of enforcement and market oversight at the FCA said, “Failing to handle complaints appropriately means that firms risk treating customers unfairly for a second time and it’s important that firms get this right.
“We remain determined to ensure that firms put right the harm caused by PPI mis-selling and regain the trust of the public."