The Financial Services Authority (FSA) has fined Abbey National 800,000 pounds for mishandling mortgage complaints and giving the regulator, inaccurate and potentially misleading information.

The financial watchdog said on Wednesday that Britain's second-largest mortgage lender had mishandled around 5,000 complaints between October 2001 and September 2003. Abbey has admitted that a similar level of failure was likely to have occurred between January 2001 and December 2004.

FSA became responsible for regulating mortgage lending on a statutory (legal) basis from 31 October 2004 . Complaints about breaches of the code relating to events before 31 October may nevertheless be eligible for consideration by the Financial Ombudsman Service.

FSA rules require firms to send a written acknowledgement of clients’ complaint within five business days (FSA rules on complaints handling can be viewed on the FSA's website).

In the same incidents earlier FSA fined Friends Provident Life and Pensions Limited £675,000 in December 2003 for failures in its procedures which led to the mis-handling of mortgage endowment complaints, and in March 2004, the FSA fined Allied Dunbar Assurance plc £725,000 for serious flaws contained in its procedures for handling mortgage endowment complaints.

The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.

Endowment mortgages were the cause of the most complaints, attracting more dissatisfaction than any other financial product.

Many mortgage complaints arose when lenders cut their standard variable mortgage rate, but failed to feed the benefits through to existing borrowers, the ombudsman said.

Complaints procedures mean that policyholders have to first complain to the company who sold them their endowment product and receive its decision on the validity of that claim - as well as possibly compensation - before they can complain to the Financial Service Ombudsman.

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