After a second breach of the requirements relating to payment protection insurance (PPI) annual statements, two of the UK’s five largest banking groups have been ordered to appoint external reviewers to scrutinise their practices.
The Competition and Markets Authority (CMA) gave this instruction to one banking group that failed to send around 11,000 customers over a six-year period; and to another that sent incorrect statements to around 3,400 PPI policyholders – 311 of these customers received incorrect information over a six-year period. The first bank has also been forced to pay approximately £1.5 million in refunds to the affected customers.
For several years now, PPI providers have been required to send out annual statements which state the amount the customer has paid under the policy, and which also sets out their right to cancel.
Once the external reviewers have completed their audit, they will then submit a formal written report on their findings.
Adam Land, the CMA’s senior director of remedies, business and financial analysis, said:
“It is unacceptable that some banks aren’t providing PPI reminders – or are sending inaccurate ones – eight years after our order came into force. The legally binding directions we’ve issued today will make sure that both [names of banking groups] now play by the rules.
“These are serious issues that, in the future, may result in fines if the Government gives us the powers we’ve asked for. For now, we expect [name of banking group] to repay all affected customers quickly, and for both [names of banking groups] to make sure that similar breaches do not happen again.”
Spokespeople for the two banks in question said:
“We’re sorry that as part of a communication about their PPI policies, a small number of customers who were in arrears received incorrect information on their mortgage balance. Customers were not financially impacted as a result and would have been aware of their correct mortgage balance through their annual mortgage statement and other communications. We informed the CMA as soon as we became aware of the issue and have taken steps to ensure it does not happen again.”
“We are contacting those customers who may not have received their annual PPI review letters and have put systems in place to ensure that this does not happen again. We would like to apologise to any customers affected.”
Two more major UK banking groups received directions from the CMA in 2018 for similar failings.
This issue is not connected to the Financial Conduct Authority’s PPI complaints deadline, which was August 29. Now this deadline has been and gone, it is likely that PPI providers will only consider complaints about new insurance sales, or about servicing and administration of policies sold prior to the deadline.
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