PPI News

NatWest Fined for Unfair Handling of PPI Compensation Claims

January 11, 2011

The Financial Services Authority (FSA) has criticised NatWest´s unfair handling of PPI compensation claims and fined the bank £2.8 million.

An investigation by the FSA into NatWest´s unfair handling of PPI compensation claims found numerous failings in the way that the bank dealt with customers´ complaints, resulting in an unacceptably high risk that customers would have their claims for PPI compensation unjustifiably rejected.

Among the numerous failings the FSA discovered with NatWest´s unfair handling of PPI compensation claims were:

  • unjustifiable delays in responding to customers´ complaints;
  • poor quality investigations into customers´ complaints, with claims handlers failing to obtain and consider all the available information when making their decision;
  • the issuing of correspondence that failed to fully address the concerns raised by customers and that failed to explain why complaints had been rejected; and
  • that customers did not receive their Financial Services Ombudsman referral rights within the appropriate time period.

Of the PPI compensation claims reviewed by the FSA, 53% were considered to be handled unfairly. 62% showed a failure to comply with the FSA´s requirements on timeliness and disclosure of Ombudsman referral rights, and 31% failed to demonstrate fair outcomes for consumers.

The FSA’s investigation also found that:

  • NatWest did not provide claims handling staff with sufficient training and guidance on how to properly investigate a claim;
  • the monitoring of claims handling in branches could not determine whether customers were being treated fairly; and
  • NatWest failed to ensure that claims handlers properly reviewed claims taking account of all the relevant factors.

Margaret Cole – the FSA’s Managing Director of Enforcement and Financial crime said: “We expect firms to treat customers fairly and that consumers can be confident that their complaints will be dealt with properly. The failure of the NatWest to deal adequately with complaints put consumers at unacceptable risk and the fine of £2.8 million reflects this”.

Ms Cole added: “The poor complaints procedure of NatWest came to light during our review of complaint handling in major banks. The review showed that banks need to make major changes to handle consumer complaints fairly and the FSA will continue to take appropriate action to ensure these changes are put in place.”

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Banks to Stop Selling Unfair Single Premium PPI Policies

January 20, 2009

The Financial Services Authority (FSA) today welcomed the announcement that selected banks will stop selling unfair single premium PPI policies.

Single premium PPI policies have, for a long time, been considered unfair to consumers. Added to credit agreements at the beginning of an unsecured personal loan, banks can charge interest on the single premium and increase their profits at the consumer´s expense.

The FSA recognises the importance of appropriate protection insurance in the current economic climate, but remains concerned about unfair single premium PPI policies and the practises that are used to sell them.

The FSA has told banks and other credit providers that consumers being sold this type of product should be fully informed about how the product works, what it covers and how much it costs – including the cost of interest when the premium for the PPI policy is added to the loan amount, and interest charged on it.

Selected banks have now announced that they are going to stop selling the unfair single premium PPI policies on unsecured personal loans at the end of January 2009. These banks are:

  • Alliance & Leicester
  • Bank of Scotland
  • Barclays
  • Co-op Bank
  • Halifax Bank
  • Lloyds TSB
  • NatWest
  • Royal Bank of Scotland

Some of the above banks, along with other credit providers, will be offering consumers PPI policies with regular monthly premiums instead of the unfair single premium PPI policies. The FSA hopes that other firms still selling unfair single premium PPI policies will take note of these developments.

Jon Pain – the FSA’s Managing Director of Retail Markets – said: “We are pleased these firms have stopped selling single premium policies and would expect other firms to notice these developments and review their own positions. A PPI product can be helpful for consumers wanting protection on a specific credit agreement, as long as the policy is sold appropriately. Consumers can visit our website to get information on their protection choices.”

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