The Financial Conduct Authority (FCA) has published the findings of its complaints handling review of 18 medium and small sized firms currently handling payment protection insurance (PPI) complaints.
The review covered smaller high street banks, building societies, credit card providers and personal loan companies. Together, they account for around one million complaints, which is approximately 16% of all PPI complaints. To date, these firms have paid £1.1bn of the total redress paid out to consumers, which now stands at nearly £12bn.
The review found that while some firms are handling complaints in line with our expectations, for others, there are still significant issues that need to be put right. The FCA found serious problems with complaint handling decisions and communications to customers at two thirds of the firms reviewed (12 of 18).
The FCA is working closely with firms to help improve their complaint handling processes to a level that consumers would expect and to remediate any detriment that may have occurred. One medium sized firm has already been referred to Enforcement as a result of our action and the FCA is considering whether a number of others should also face further action.
Clive Adamson, director of supervision at the FCA, said: “We expect firms to deliver fair outcomes to PPI complainants. In our review, we found that some firms are doing this while it is clear others still have some way to go.
“I am encouraged that the firms in scope of our review 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 also published the amount of PPI redress paid out in July, which was nearly £528 million. This was up from £498million in June and marks the first time in 2013 that over £500 million has been paid out in any one month.
The FCA has also been assessing the complaints handling of larger firms including high street banks and credit card companies. It will publish the findings of those reviews at a later date.
The FCA asked each firm to provide a sample of 50 PPI complaints (40 rejected complaints each, and 10 upheld) which it would review, measuring each against the following criteria:
- Whether complaint handlers were assessing the merits of individual complaints in line with the relevant FCA rules and guidance applicable to PPI;
- Whether complaint handlers were making fair offers of redress; and
- Whether complaint handlers explained their decisions clearly to complainants.
Six of the firms involved were generally delivering fair outcomes on PPI complaints. Of the reject decisions by these firms, the FCA disagreed with less than 8%, and of those upheld, it had concerns with redress offers in 21% of cases.
The FCA believes firms should try to establish the bigger picture and try to clarify the nature of the complaint; this means looking at the information available at the time to the customer, their personal circumstances, and the manner in which sales were being made at the time. By and large, these six firms did this although there was some scope to improve the clarity and quality of some responses to complainants, the FCA said.
The regulator said that of greater concern were the remaining 12 firms; these 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 uphold decisions.
