Out-Law News 1 min. read
01 Sep 2014, 2:26 pm
The complaints were assessed in 2012 and 2013, during a period when the proportion of complaints being upheld fell, the Financial Conduct Authority (FCA) said, in its update on the PPI redress programme. The regulator said that it was not satisfied that all of these customers had necessarily been treated fairly.
Banking litigation expert Michael Isaacs of Pinsent Masons, the law firm behind Out-Law.com, said that although the announcement was "good news for affected customers", the reopening of historical complaints would increase the regulatory burdens on banks.
"It is right that people get the compensation due to them," he said. "However, for banks already hugely burdened with regulatory attention and redress schemes across their operations, the reopening of complaints that had been thought of as dealt with will place further strain on already stretched in-house redress teams."
"Thankfully, many banks are now adept at the processes involved and the up-scaling of operations that might be needed. We will have to see if there is another round of provisioning in consequence of this, though. The FCA will want to see lessons learned in future remediations," he said.
PPI was intended to cover repayments due on loans or credit cards for people who could not afford them due to an accident, unemployment, sickness or death. However, these products were widely mis-sold to customers who in some cases were not told that a policy was optional or that the policy they were sold did not cover their circumstances. According to the FCA's latest figures, firms have now handled over 13 million PPI complaints of which 70% were upheld in favour of the customer. Since 2011, when the FCA began tracking compensation payments, over £16 billion has been paid out.
"Making sure anybody previous mis-sold PPI is treated fairly now, and paid redress where it's due, is an important step in rebuilding trust in financial institutions," said FCA chief executive Martin Wheatley. "In around two and a half million complaints this was not necessarily the case so, at our request, firms will be looking at these complaints again."
"The process is now working well: in just over three years £16bn has been put back into the pocket of the consumer – that is unprecedented. Given the enormity of this exercise it is no surprise that there have been some issues along the way but our approach is delivering a good result for consumers," he said.
The FCA said that it was expecting to scale down its more intensive supervisory work in the coming year with another, potentially final, progress update due in 2015.