The Bank of Scotland has been fined �750,000 by the Financial Services Authority (FSA) for badly administering its savings schemes.

The financial regulator said it had fined the bank for the failure of the bank's PEP/ISA personal savings department to administer funds properly.

The problems were caused by systemic failings in controls and inadequate staff training Financial Services Authority

The FSA said the bank's inappropriate handling of the funds had put 30,000 customers of Personal Equity Plans and Individual Savings Accounts at risk of losing money - and it had put the bank at risk of increased fraud.

In a statement following the announcement, the Bank of Scotland said it had "learned a number of hard lessons in the process" and apologised to investors.

Administration errors

The problem occurred in 1999 when Bank of Scotland moved the administration of its PEP/ISA accounts to a new computer system.

Investors were not credited money due at the right time and, as a result, they could not reinvest that money.

"The problems were caused by systemic failings in controls and inadequate staff training," the FSA said in a statement.

"Bank of Scotland have now addressed these weaknesses and are paying compensation where this is due."

The FSA added that not many investors lost money because share prices were falling when the maladministration was taking place.

In a statement, Bank of Scotland said: "Bank of Scotland's customers had every right to expect that the administration of their PEP/ISA accounts would be done properly. That did not always happen and we have apologised to those customers whose accounts were not in order"

"Bank of Scotland took too long to solve this problem. We regret that and have learned a number of hard lessons in the process."

Toughening up

The fine for Britain's fifth biggest bank was the latest in a series of tough moves by the FSA.

Back in December the City watchdog fined the Royal Bank of Scotland group �750,000 for failing to keep adequate controls against money laundering.

In the same month Credit Suisse bank was fined a record �4m for trying to mislead Japanese regulatory and tax authorities.