FCA review of medium-sized firms’ PPI complaints handling finds significant room for improvement

The Financial Conduct Authority (FCA) today published the findings of a complaints handling review of 18 medium and small sized firms currently handling payment protection insurance (PPI) complaints.

The review covered smaller high street banks, building societies, credit card providers and personal loan companies. Together, they account for around one million complaints, which is approximately 16 per cent of all PPI complaints. To date, these firms have paid £1.1bn of the total redress paid out to consumers, which now stands at nearly £12bn.

The review found that while some firms are handling complaints in line with our expectations, for others, there are still significant issues that need to be put right. The FCA found serious problems with complaint handling decisions and communications to customers at two thirds of the firms reviewed (12 of 18).

The FCA is working closely with firms to help improve their complaint handling processes to a level that consumers would expect and to remediate any detriment that may have occurred.  One medium sized firm has already been referred to Enforcement as a result of our action and the FCA is considering whether a number of others should also face further action.

Clive Adamson, director of supervision at the FCA, said:

"We expect firms to deliver fair outcomes to PPI complainants. In our review, we found that some firms are doing this while it is clear others still have some way to go.

"I am encouraged that the firms in scope of our review have taken immediate steps to put in place the necessary remedial measures and I expect them to ensure they have robust processes in place to work through the remaining complaints, so that eligible complainants can be paid out as quickly as possible."

The FCA also published the amount of PPI redress paid out in July, which was nearly £528million. This was up from £498million in June and marks the first time in 2013 that over £500million has been paid out in any one month.

The FCA has also been assessing the complaints handling of larger firms including high street banks and credit card companies. It will publish the findings of those reviews at a later date.

How the review was done

The FCA asked each firm to provide a sample of 50 PPI complaints (40 rejected complaints each, and 10 upheld) which it would review, measuring each against the following criteria:

  • Whether complaint handlers were assessing the merits of individual complaints in line with the relevant FCA rules and guidance applicable to PPI;
  • Whether complaint handlers were making fair offers of redress; and
  • Whether complaint handlers explained their decisions clearly to complainants.

What the FCA found

Six of the firms involved were generally delivering fair outcomes on PPI complaints.   Of the reject decisions by these firms, the FCA disagreed with less than 8 per cent, and of those upheld, we had concerns with redress offers in 21 per cent of cases.

The FCA believes firms should try to establish the bigger picture and try to clarify the nature of the complaint; this means looking at the information available at the time to the customer, their personal circumstances, and the manner in which sales were being made at the time. By and large, these six firms did this although there was some scope to improve the clarity and quality of some responses to complainants.

Of greater concern were the remaining 12 firms; these account for 6% of all PPI complaints. The FCA disagreed with six out of ten of their rejected cases and had concerns with the redress offered in over two fifths (43 per cent) of their uphold decisions.

More detail on the findings can be found in the full review.

Notes for editors

  1. The FCA is tracking the total amount of PPI redress paid and publishes this figure on a monthly basis.
  2. More information on how to claim for mis-sold PPI.
  3. On the 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  4. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  5. Find out more information about the FCA, as well as how it is different to the PRA.