An investigation by the City regulator has uncovered "serious problems" with the handling of payment protection insurance complaints at two-thirds of the firms it looked at.
The Financial Conduct Authority said that as a result of the findings, one unnamed "medium-sized firm" had already been referred to its enforcement division and could face a fine. It is considering whether a number of others should also face further action.
PPI has become the most costly of Britain's financial mis-selling scandals, with the estimated bill running at more than £18bn, but the FCA's damning findings suggest many firms still have a long way to go in terms of treating customers fairly.
The regulator carried out a review of 18 medium-sized firms made up of smaller high street banks, building societies, credit card providers and personal loan companies. Together they account for about 1m complaints regarding PPI – about 16% of the total – and to date have paid out £1.1bn of compensation.
The companies were each asked to provide a sample of 50 complaints that had been received, 10 of which were upheld and the rest rejected, so the FCA could look closely at how they were handled.
The review found that while some firms were handling complaints in line with expectations, others had "significant issues" that needed to be put right.
"The FCA found serious problems with complaint handling decisions and communications to customers at two-thirds of the firms reviewed," the regulator said.
In the case of these 12 firms, which account for 6% of all PPI complaints, the FCA disagreed with six out of 10 of their rejected cases and "had concerns" with the redress offered in 43% of their decisions where the customer's complaint was upheld.
The main shortcomings identified included not paying enough attention to the fact that restrictions and exclusions on a policy, and/or the cost of the cover, were not fully disclosed at the time the policy was sold, and providing "inadequate" explanations to customers about decisions and any offers of compensation.
The other six firms "were generally delivering fair outcomes on PPI complaints", the FCA said. It disagreed with less than 8% of the rejection decisions by these firms, and of those upheld by the companies it had concerns about the compensation offers in 21% of cases.
The regulator said it was working closely with the banks and others to help improve their complaint handling to a level that consumers would expect, and to put right any "detriment" that may have occurred.
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."
The FCA has also been looking at complaints handling at larger firms, including high street banks and major credit card companies, and will publish these findings at a later date.
In addition, the regulator published the amount of PPI compensation paid out in July, which totalled almost £528m. This is the first time in 2013 that more than £500m has been paid out in a single month.
theguardian.com
The Financial Conduct Authority said that as a result of the findings, one unnamed "medium-sized firm" had already been referred to its enforcement division and could face a fine. It is considering whether a number of others should also face further action.
PPI has become the most costly of Britain's financial mis-selling scandals, with the estimated bill running at more than £18bn, but the FCA's damning findings suggest many firms still have a long way to go in terms of treating customers fairly.
The regulator carried out a review of 18 medium-sized firms made up of smaller high street banks, building societies, credit card providers and personal loan companies. Together they account for about 1m complaints regarding PPI – about 16% of the total – and to date have paid out £1.1bn of compensation.
The companies were each asked to provide a sample of 50 complaints that had been received, 10 of which were upheld and the rest rejected, so the FCA could look closely at how they were handled.
The review found that while some firms were handling complaints in line with expectations, others had "significant issues" that needed to be put right.
"The FCA found serious problems with complaint handling decisions and communications to customers at two-thirds of the firms reviewed," the regulator said.
In the case of these 12 firms, which account for 6% of all PPI complaints, the FCA disagreed with six out of 10 of their rejected cases and "had concerns" with the redress offered in 43% of their decisions where the customer's complaint was upheld.
The main shortcomings identified included not paying enough attention to the fact that restrictions and exclusions on a policy, and/or the cost of the cover, were not fully disclosed at the time the policy was sold, and providing "inadequate" explanations to customers about decisions and any offers of compensation.
The other six firms "were generally delivering fair outcomes on PPI complaints", the FCA said. It disagreed with less than 8% of the rejection decisions by these firms, and of those upheld by the companies it had concerns about the compensation offers in 21% of cases.
The regulator said it was working closely with the banks and others to help improve their complaint handling to a level that consumers would expect, and to put right any "detriment" that may have occurred.
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."
The FCA has also been looking at complaints handling at larger firms, including high street banks and major credit card companies, and will publish these findings at a later date.
In addition, the regulator published the amount of PPI compensation paid out in July, which totalled almost £528m. This is the first time in 2013 that more than £500m has been paid out in a single month.
theguardian.com
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