'Serious faults' found with PPI handling

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PPI formThere are significant issues with the way in which two thirds of small and medium-sized companies are handling payment protection insurance (PPI) claims, the financial regulator has found.

One company has been referred for enforcement action, while 16 others (of the 18 reviewed) were found to have serious issues with complaint handling decisions and communication to customers.


The companies investigated by the Financial Conduct Authority (FCA) include small high street banks, building societies, credit card providers and personal loan companies. Between them they account for around one million complaints, or 16% of all PPI complaints.

Failures in complaint handling
In the FCA investigation companies were asked to submit a sample of 50 PPI complaints, 40 of which had been rejected and 10 which had been upheld.

These were then measured by looking at whether the companies were assessing complaints in line with relevant FCA rules and guidelines, if they were making fair offers of redress and if the outcomes had been explained clearly to the complainants.

Of the 18 companies reviewed, six firms were said to be delivering fair outcomes. In these cases the FCA disagreed with less than 8% of the rejected claims but had concerns with more than 21% of the redress offers.

The 12 other firms in question, which account for 6% of all PPI complaints, were of more concern. In these the FCA disagreed with six out of 10 of the rejected cases and had concerns about 43% of the redress offers.

The companies in question have not been named by the FCA but the regulator says it's now working closely with them to improve the complaint handling process.

PPI compensation
In July almost £528 million was paid out in compensation for PPI mis-selling, a rise from £498 million in June. This is the first time the amount has passed the £500 million mark in 2013.

Payment protection insurance is supposed to offer protection should you fall ill or lose your job, covering your payments towards things like credit cards or loans. But millions of policies were mis-sold, with many people either unaware they were paying for PPI, or paying for it without being able
to claim on it.

More than £10 billion has now been paid out by the banks, but many companies, such as those investigated by the FCA, have also been found guilty of not going through the correct procedures when dealing with PPI complaints.

The FCA is also investigating how larger companies are handling PPI complaints. The results of this will be published later in the year.

Making a PPI claim
We're bombarded with adverts from PPI compensation companies claiming to do the hard work for us. But in return these companies will take a cut of any compensation, typically around 25%.

It's completely free to apply for PPI compensation on your own and you don't need to go through one of these companies. Our article How to claim your PPI compensation has more details.