Regulation  

More must be done on PPI: industry body

More must be done on PPI: industry body

An industry body has called for payment protection insurance complaint handling to be treated as a key consumer protection issue, warning that attempts to rebuild trust in financial services will fail otherwise.

In a statement, the Professional Financial Claims Association called for financial institutions to adopt three customer-focused principles, adding: “All attempts to rebuild trust in the financial services sector will fail if these core principles are not adopted.”

Three principles set out by PFCA
Customers have a right to expect they will be treated fairly in all interactions with a business, but particularly when they complain about a financial product bought through the firm.
Complaint handling, particularly relating to PPI, should be considered a key consumer protection issue and treated as such at all levels within a business.
Customers who have already suffered detriment should not suffer further detriment by not being allowed access to justice and the redress they are owed.

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The demand came after the FCA imposed a £117.4m fine on Lloyds Banking Group for failing to pay due regard to the interests of, or treat fairly, customers who had complained about PPI.

Lloyds agreed to settle at an early stage of the regulator’s investigation, meaning it qualified for a 30 per cent discount from an original financial penalty of £167.7m.

In a 50-page decision notice dated 4 June 2015, the FCA said that between 5 March 2012 and 28 May 2013 Lloyds issued guidance to PPI complaint handlers, which directed them to assume Lloyds’s PPI sales processes were compliant and robust.

The FCA added that this direction, described to complaint handlers as the overriding principle, was relied on in some cases to dismiss customers’ personal reports of what had happened during a PPI sale or to not fully investigate complaints.

In May, chief ombudsman at Fos Caroline Wayman said that of the 2.8m disputes between financial businesses and customers Fos had dealt with since 2001, 1.8m had related to mortgage endowments, bank charges and PPI.

She said: “Our workload over the last 15 years has been constantly dominated by the past, clearing up the fall-out of the mass claims and mis-selling scandals of the last decade and a half.”

Adviser view

Marvin Evans, principal for Gloucestershire-based Old Bank Wealth Management, said: “I would like to think customers are getting good advice from corporate institutions such as banks and building societies.”

Email: david.baxter@ft.com