In an update on its Payment Protection Insurance (PPI) redress work, the Financial Conduct Authority (FCA) has reported that firms have improved the way they handle complaints.
In another positive move, banks, credit card providers and personal loan companies have agreed to reassess more than two and half million complaints from 2012 and 2013 which they may have either unfairly rejected or paid too little redress to.
Martin Wheatley, chief executive officer, at the FCA, said:
“Making sure anybody previously mis-sold PPI is treated fairly now, and paid redress where its due, is an important step in rebuilding trust in financial institutions. 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.”
The FCA’s update report also gives a snapshot of the PPI redress programme at this moment in time; it shows:
The report also sets out key elements of the work the regulator has undertaken with firms, and some of the interventions it has made. This includes seeking written assurance from some firms that their process is fit for purpose and fair, and formal undertakings (known as attestations) from senior managers within firms to ensure any necessary changes to processes are made.
In 2012 and 2013 the proportion of complaints being upheld, known as the uphold rate, fell. Upon further investigation the FCA was not satisfied that all these complainants had necessarily been treated fairly. While the FCA recognises that firms can change the way they handle complaints, it must always be done with customer fairness at heart. By late 2012 the average uphold rate had fallen to 60% (with some firms’ rates falling lower). Following FCA intervention the rates have now picked up.
This improvement is also borne out by the proportion of complaint decisions overturned by the Financial Ombudsman Service: in late 2011 88% of complaints were overturned, in late 2012 it reduced to 60%, and, in late 2013, to 56%. There is still more to be done, but the trend is heading in the right direction.
If the long term falling trend in PPI complaint volumes persists, and firms continue to improve their PPI complaint handling and complete their mailings to those who are likely to have been mis-sold but not complained, the FCA hopes to be able to scale down its intensive PPI work during 2015.
The FCA itself has learnt lessons from PPI about redress exercises. Subsequent programmes have had clearer outcomes, hard deadlines and are more direct, making it easier for those affected to get the redress they are due. Examples include the redress schemes for Interest Rate Hedging Products (which has already delivered £1.2bn of redress since May 2013) and mis-sold card protection and identity theft insurance.
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