Two of Britain’s biggest banks have been ordered to take action on PPI after failing to send thousands of customers legally binding annual statements.
The Competition and Markets Authority (CMA) said the two banks failed to send, or sent inaccurate, annual PPI reminders to customers dating as far back as six years.
They’ve now been ordered to appoint an independent body to manage their PPI processes instead.
Under current rules, PPI customers should receive an annual reminder from their provider setting out how much they’ve paid for their policy, what cover they have and their right to cancel.
But RBS failed to provide reminders to almost 11,000 of its customers for up to six years.
The lender has now written to those affected, providing a reminder of their right to cancel their policy, and it has so far paid out over £1.5million in refunds to these customers.
Santander, meanwhile, sent out annual reminders containing incorrect information to over 3,400 of its mortgage PPI customers over a five-year period.
It is the second time both banks have been found to be in breach of the PPI rules, with each warned to improve their practices in 2016.
Payment protection insurance, or PPI as it’s widely known, is sold alongside loans, cards, overdrafts, mortgages and catalogue accounts, to cover repayments if you can’t. The mis-selling of it has become one of the biggest banking scandals in history.
It’s sold on loans, mortgages, credit cards and even store cards through high street chains, catalogue firms, banks, building societies and even supermarkets.
However, in recent years, banks and building societies have been caught out for massively overcharging and mis-selling it – often telling customers it was compulsory for the loan they needed.
Now, the deadline for those mis-sold is approaching (29 August) – and £10billion in compensation remains unclaimed.
Adam Land, at the CMA, 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. For now, we expect RBS to repay all affected customers quickly, and for both RBS and Santander to make sure that similar breaches do not happen again.”
A Santander spokesperson 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.”
Adam French at Which? added: “This serves as yet another example of banks’ woeful approach to PPI. Failing to adhere to new measures that were introduced 8 years ago does nothing to improve trust in an industry still dealing with a mis-selling scandal.
“Payment Protection Insurance was mis-sold to millions of people for over two decades, and since then billions have been repaid to consumers. With the deadline to make a claim just under a week away, time is running out for people who think they may been mis-sold PPI – it is now or never.”