The Competition and Markets Authority (CMA) has taken action against the Royal Bank of Scotland (RBS) and Santander after they failed to send, or sent inaccurate, annual payment protection insurance (PPI) reminders.
The CMA issued the banks with directions requiring them to appoint an independent body to audit their PPI processes. They must also put in place procedures to ensure that similar incidents do not happen again.
In addition, RBS has now written to those affected, providing a reminder of their right to cancel their policy and has so far paid out over £1.5m in refunds to customers.
Following an investigation into PPI by the Competition Commission in 2011, a legally-binding order was put in place, which requires – among other things – that customers receive an annual reminder from their PPI provider that clearly sets out how much they’ve paid for their policy, the type of cover they have, and reminds them of their right to cancel.
RBS failed to provide reminders to almost 11,000 of its customers for up to six years, meaning those affected were unable to fully assess whether they wanted to continue paying for PPI, and were stopped from shopping around effectively. In addition, many customers may not have even been aware they still had PPI.
Santander breached the order by sending out annual reminders containing incorrect information to over 3,400 of its mortgage PPI customers from 2012–2017. It must now appoint an independent body to review its PPI processes and continue to maintain its systems to prevent further breaches. The results of the audits will be fed back to the CMA.
Both banks were previously warned by the CMA to improve their PPI practices in 2016.
Adam Land, the CMA’s senior director of remedies, business and financial analysis, said: “It is unacceptable that some banks aren’t providing PPI reminders – or are sending inaccurate ones – eight years after our order came into force. The legally binding directions we’ve issued today will make sure that both RBS and Santander now play by the rules.
“These are serious issues that, in the future, may result in fines if the government gives us the powers we’ve asked for.
“For now, we expect RBS to repay all affected customers quickly, and for both RBS and Santander to make sure that similar breaches do not happen again.”
A spokesperson for Santander said: “We’re sorry that as part of a communication about their PPI policies, a small number of customers who were in arrears received incorrect information on their mortgage balance. Customers were not financially impacted as a result and would have been aware of their correct mortgage balance through their annual mortgage statement and other communications. We informed the CMA as soon as we became aware of the issue and have taken steps to ensure it does not happen again.”
An RBS spokesperson said: "We are contacting those customers who may not have received their annual PPI review letters and have put systems in place to ensure that this does not happen again. We would like to apologise to any customers affected."
Loan customers who were mis-sold PPI have until August 29, 2019 to claim for compensation.