An investigation by the Financial Conduct Authority (FCA) has found “serious problems” with two thirds of the firms it looked at in a recent review.
The FCA looked into 18 medium sized firms, made up of credit card providers, personal loan companies, smaller high street banks and building societies, and found “significant issues” with the way payment protection insurance (PPI) complaints are handled. Between them, these firms make up 16% of the total number of PPI complaints, and between them have paid out £1.1 billion in compensation to date.
As a result of the review, one “medium sized firm” has already been referred to the FCA’s enforcement division, and could face a fine. A number of other firms are also being considered.
The estimated PPI compensation bill runs at more than £18 billion, but the FCA’s findings show that some firms still aren’t doing enough. The findings showed that there are “serious problems with complaint handling decisions and communications to customers at two-thirds of the firms reviewed," according to the regulator. In the case of these 12 firms, accounting for 6% of all PPI complaints, the FCA disagreed with 6 out of 10 of their rejected cases and “had concerns” with the redress offered in 43% of the cases where the customer's complaint was upheld.
The firms’ failing included not paying enough attention to the fact that the restrictions and exclusions on a policy weren’t fully explained when the policy was taken out, and providing “inadequate” explanations to customers about decisions regarding compensation. The FCA said it was working closely with the firms to bring their complaint handling up to the level that consumers would expect.
Clive Adamson, director of supervision at the FCA, said:
“I am encouraged that the firms … have taken immediate steps to put in place the necessary remedial measures, and I expect them to ensure they have robust processes in place to work through the remaining complaints, so that eligible complainants can be paid out as quickly as possible.”
However, some groups feel that the FCA aren’t doing enough. Richard Lloyd, executive director of Which? said:
“People deserve to get back what they’re rightly owed, with minimum hassle.
“We want the FCA to name and shame the firms who are not treating their customers fairly and follow up with tough action, including heavy fines, against anyone found breaking the rules.”