On June 1 2016, the Financial Conduct Authority (FCA) announced it had fined CT Capital Limited £2,360,900 for failing to handle payment protection insurance claims correctly.
The FCA found issues at Norwich-based CT Capital – the parent company of a number of lending and broking firms – during its 2012 thematic review into the handling of PPI complaints. The firm’s actions were judged to be breaches of two of the Principles for Business: Principle 3 (management and control) and Principle 6 (treating customers fairly).
One of CT’s central failings was rejecting complaints even where the recorded sales call indicated that either the customer had not been provided with sufficient information during the call, or that the firm had failed to obtain the customer’s explicit consent to purchasing PPI. CT instead relied on the fact that written information about the insurance was sent to the customer at a later date as grounds for rejecting the complaint. In doing so, the firm failed to take note of warnings issued by the FCA regarding how PPI complaints should be handled.
Another significant problem was that CT incorrectly interpreted the Financial Ombudsman Service (FOS) time barring rules. These allow complaints to be forwarded to the FOS if the complaint was made within six years of the sale of the product, or if later, within three years of the date on which the customer should have been aware of the problem. CT only allowed complaints made within six years of the sale, and rejected all complaints that would have met the second criterion. Customers who had their complaints rejected on the grounds it was more than six years since the PPI was sold were also not informed of their right to refer the matter to the FOS. CT was advised by an external consultant in March 2011 that this practice was likely to contravene regulatory requirements, but failed to act until December 2012, when an ombudsman at the FOS found against them regarding this issue.
The firm was also said to have failed to assess whether single premium PPI with a non-proportional refund in case of early cancellation was suitable for customers who intended to re-finance their loans within a few years.
In every month between May 2011 and September 2013, the FOS upheld at least 80% of the PPI cases from CT Capital that it was asked to adjudicate on. In three of these months, the uphold rate was 100%.
In summary, the FCA said of CT’s complaint handling practices:
“CT Capital directed its PPI complaint handlers actively to seek reasons why the policy may have been suitable, or to seek to dismiss grounds for asserting that it may have been, rather than completing an impartial assessment.”
CT is conducting a review of its previous PPI complaints with the assistance of an external consultant, and by January 2016 had paid an additional £74 million in redress.
Mark Steward, director of enforcement and market oversight at the FCA said:
“Failing to handle complaints appropriately means that firms risk treating customers unfairly for a second time and it’s important that firms get this right.
“We have taken action against firms on numerous occasions and there’s no excuse for firms continuing to get it wrong. We remain determined to ensure that firms put right the harm caused by PPI mis-selling and regain the trust of the public. We will continue to monitor how firms are dealing with complaints and will not hesitate to take action where we see firms not complying with their obligations.”
Previous fines imposed by the regulator for PPI complaint handling deficiencies include a £117 million fine for Lloyds Banking Group and a £20.6 million penalty for Clydesdale Bank.
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