For the second time, a major high street bank has been censured by the competition watchdog for failing to send annual reminders to customers who had payment protection insurance (PPI) policies on their credit cards.
Back in 2015, the bank admitted to the Competition and Markets Authority (CMA) that it had not sent these annual reminders to around 10,000 customers. Now it has been identified that the same bank failed to send reminders to 2,265 credit card PPI customers between October 2016 and October 2017. The bank has been issued with “legal directions” under which it must put in place systems and controls to ensure that a similar breach does not occur in the future.
The requirement to send annual reminders was introduced in 2011 – these notices must clearly set out the cost of the PPI and must provide details of the customer’s right to cancel their insurance.
Adam Land, the CMA’s senior director of remedies, business and financial analysis, said:
“The annual reminder is an important measure so customers know they still have a PPI policy and how much it is costing them each year, as well as their right to cancel or switch.
“This is [the bank’s] second breach of the PPI order. As a result, we are issuing legal directions which can be enforced by a court, to ensure they comply with the order.
“We now require assurances from [the bank] they have now put adequate systems in place to prevent a similar breach from occurring again.”
A spokesperson for the bank, which incurred £400 million worth of PPI charges in the first half of 2018, blamed the problem on a technical issue. The spokesperson said:
“Between October 2016 and October 2017 a small number of PPI customers were not sent the Annual Review statements which they were entitled to receive. This issue has now been resolved and all customers have received their missing statements.
“We have written to all affected customers to apologise unreservedly and to outline how we will recompense them where they would have otherwise cancelled their policy.
“We take this matter extremely seriously and have conducted an internal investigation to ensure all stringent controls and policies continue to be upheld.”
Although a deadline for making a PPI claim is little more than a year away, the total amount of redress paid by the UK’s financial institutions in June 2018 was actually lower than in any of the previous three months. Data from the Financial Conduct Authority (FCA) shows that £389.6 million was paid out in compensation in March, followed by £398.3 million in April, £403.4 million in May and £383 million in June. The total compensation paid to date by financial firms stands at £31.9 billion.
At least one of the other major high street banking groups is reported to be considering increasing its PPI compensation provision, in expectation of a rush of claims ahead of the deadline.
The Daily Telegraph has recently reported that some firms are refusing to pay out on store card PPI claims that date back to before April 6 2007. The FCA apparently allows firms to do this as store cards are a type of “restricted credit”, and the Financial Ombudsman Service did not handle restricted credit complaints until 2007.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article