LONDON (Alliance News) - The City regulator is gathering evidence about the process for complaining about payment protection insurance, a product widely mis-sold by UK lenders, a development that could result in a time limit on complaints over a scandal that has seen GBP17.3 billion paid out in compensation.
In a statement, the Financial Conduct Authority said it will use the evidence it gathers to assess whether the current complaints process is helping the regulator to meet its objectives of protecting consumers and strengthening the integrity of the UK's financial system.
"The FCA will then consider whether further interventions may be appropriate - which could include a consumer communication campaign; a possible time limit on complaints; or other rule changes or guidance - or whether the continuation of the PPI scheme in its current form best meets its objectives," the regulator said.
"While this work continues, the FCA expects firms to continue to deal with PPI complaints in accordance with our requirements," the FCA added.
PPI, which was sold to customers alongside products including unsecured loans, credit cards and mortgages, was supposed to help repay some or all of their borrowing if an accident, unemployment, sickness or death meant they lost income. However, regulators found that the policies were mis-sold, meaning that people have been able to claim refunds from the banks that provided the products.
The FCA's decision to investigate current trends in PPI complaints comes just weeks after the chief financial ombudsman said complaints about PPI are still the "main driver" of financial disputes. In a statement issued as the Financial Ombudsman Service said on January 6 that it plans to resolve a further 250,000 disputes involving mis-sold PPI in the next financial year, Caroline Wayman said "it will be years before we can truly say this mis-selling scandal is over".
The Financial Ombudsman Service, set up by British lawmakers to sort out complaints between consumers and financial firms, received 61,611 enquiries about PPI in the last three months of 2014.
Firms have handled over 14 million consumer complaints about the sale of PPI since January 2011, according to the FCA, although regulators have in the past punished firms for failing to live up to standards.
The predecessor to the FCA, the Financial Services Authority, fined Co-operative Bank GBP113,300 in January 2013 for failing to handle PPI complaints fairly, followed by a GBP4.3 million fine imposed on Lloyds Banking Group PLC the next month for failings in its systems and controls that resulted in up to 140,000 customers receiving delayed compensation.
Lloyds has set aside the most money to cover the costs of administration and compensation related to PPI complaints, with a total provision of GBP11.33 billion at the end of the third quarter of 2014. Barclays PLC had set aside about GBP5.0 billion at the same stage, while Royal Bank Of Scotland Group PLC's provision stood at about GBP3.3 billion.
HSBC Holdings PLC's cumulative PPI provision stood at close to USD4.0 billion at the end of the third quarter of last year.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Barclays (BARC)
Lloyds (LLOY)
HSBC Holdings (HSBA)