The UK’s competition authority has rebuked Royal Bank of Scotland and Santander for breaching payment protection insurance rules just days ahead of the deadline for claims in the biggest-ever financial mis-selling scandal.
The Competition and Markets Authority said the banks had breached orders requiring them to send annual and accurate reminders to those customers who still have PPI of their right to cancel their policies.
The notifications were also supposed to detail how much customers have paid for their policies to date, and the type of cover they have.
It is the second time that both banks have breached the order, with the CMA having warned them both to improve their practices in 2016.
Santander’s breach involving sending incorrect information to more than 3,400 of its mortgage PPI customers between 2012 and 2017. The Spanish lender’s UK arm is now being forced to appoint an independent body to review its PPI processes and maintain its systems to avoid further breaches.
RBS failed to provide reminders to nearly 11,000 customers over six years, meaning some consumers were paying for the insurance without being aware they still held policies. RBS, which is 62%-owned by the UK government, has written to affected customers and paid out more than £1.5m in refunds.
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 RBS and Santander 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.”
Customers who were mis-sold PPI have until the deadline of 29 August to lodge claims with their providers. To date, the scandal has cost the UK’s largest high street banks more than £41bn.
The rebuke for RBS and Santander came as the Financial Conduct Authority on Friday issued a public warning to claims management companies (CMCs) over bad advertising practices online and on social media.
CMCs have been behind a huge number of PPI claims, which they lodge on behalf of consumers in return for a 24% share of the compensation awarded. The
City regulator said some failed to identify themselves as CMCs, or explain that customers could make a claim without using their services and without paying a fee. Other CMC adverts suggested that consumers would receive more lucrative returns if they used their services, and only gave examples of case studies where compensation was much higher than average. Bad practices also included a lack of detail over actual CMC fees.
Jonathan Davidson, an executive director of supervision for retail and authorisations at the FCA, said: “Many CMCs play a significant role in helping consumers to secure compensation. But CMCs using misleading, unclear and unfair advertising practices to get business is completely unacceptable.
“We won’t hesitate to take action where we consider that customers are being misled or otherwise treated unfairly by poor advertising.”
The FCA began regulating the CMC industry in April this year.