Regulation  

Big banks are in the FCA’s sights over PPI complaints

Large firms representing 80 per cent of total PPI complaints will be the next to bear scrutiny by the regulator, according to its latest thematic review into 18 medium-sized firms and their fairness in handling PPI complaints and paying redress.

The review revealed that one medium-sized lender had already been referred to the FCA’s enforcement division for further investigation, while others had “significant room for improvement to show”.

Complaints related to 957 PPI sales were analysed, from smaller high-street banks, building societies, credit card firms and personal loan companies.

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A 22-page report issued by the FCA revealed six of the firms, representing around 10 per cent of total PPI complaints were “mainly delivering fair outcomes to complainants” between January 2010 and December 2012, however, the remaining 12 firms – accounting for 6 per cent of total PPI complainants – raised concerns with the regulator.

The report said the FCA disagreed with 59 per cent of their rejection decisions, while it had concerns with the redress offered in 43 per cent of their upheld decisions – amounting to a total of 352 complaints.

Key shortcomings included:

• Paying insufficient regard to poor disclosure of the limitations and exclusions of a policy at the time of sale

• Not identifying poor disclosure of the cost of a policy at the time of sale

• Providing inadequate explanations of complaint decisions and redress offers

Clive Adamson, the FCA’s director of supervision, said: “We expect firms to deliver fair outcomes to PPI complainants. In our review, we found some firms are doing this while it is clear others still have some way to go.”

Mr Adamson said he was encouraged that firms had put additional procedures in place in the wake of the review, and added that the FCA would report its findings on the conduct of larger firms “at a later date”.

PPI redress payments from January to July

January: £439.3m

February: £409m

March: £375.9m

April: £424m

May: £422m

June: £498m

July: £528m

(Source: FCA)

Background

In September, a spokesman for the Financial Ombudsman Service said the massive rise in PPI complaints was due in part to some banks passing PPI cases straight to the Fos instead of following proper procedure and treating customers fairly.

Fos data revealed it received 327,035 new complaints in the first half of 2013, a 15 per cent increase on the last six months of 2012. PPI accounted for 266,228 new complaints, compared to 211,885 in the last six months of 2012.

The top 10 culprits for cases related to PPI were the main high street banks, with Bank of Scotland, Lloyds and Barclays the subject of most complaints.