The Financial Conduct Authority (FCA) has uncovered serious problems with the handling of payment protection insurance (PPI) complaints at two-thirds of the firms it reviewed. The regulator's investigation focused on 18 medium-sized firms, including smaller high street banks, building societies, credit card providers, and personal loan companies.
As a result of the findings, one unnamed medium-sized firm has been referred to the FCA's enforcement division and could face a fine. The regulator is considering whether a number of other firms should also face further action. The firms reviewed account for approximately 1 million PPI complaints, about 16% of the total, and have paid out £1.1 billion in compensation to date.
The FCA found that at 12 of the 18 firms, it disagreed with six out of ten of their rejected cases and had concerns with the redress offered in 43% of decisions where complaints were upheld. Key shortcomings included insufficient attention to whether policy restrictions and costs were fully disclosed at the point of sale, and inadequate explanations to customers about decisions and compensation offers.
The remaining six firms were generally delivering fair outcomes, with the FCA disagreeing with less than 8% of their rejection decisions. The regulator is working closely with all firms to improve complaint handling and rectify any detriment. Clive Adamson, FCA director of supervision, said firms have taken immediate steps to implement remedial measures.
The FCA also published July's PPI compensation total of nearly £528 million, the first time in 2013 that monthly payouts exceeded £500 million. The regulator will later publish findings on larger firms, including high street banks and major credit card companies.
