High street banks put PPI complaints on holdComplaints delayed while banks mount legal fight

14 October 2010


You may be spending money on expensive insurance you’ll never be able to claim on

Nearly all of the UK’s high street banks have confirmed that they will be stopping their reviews of payment protection insurance (PPI) complaints while they wait for the results of a judicial review on claiming for PPI misselling to emerge.

Following an announcement on 12 October from Lloyds that the banking group would no longer be processing PPI complaints, Barclays, HSBC, Co-op and Royal Bank of Scotland have all confirmed to Which? that complaints affected by the review would be put on hold until the outcome of the review.

Only Santander has promised to continue to process complaints on PPI as usual.

What is the problem with PPI?

In October 2006, the Office of Fair Trading (OFT) estimated there were approximately 20 million PPI policies in force, with between 6.5 and 7.5 million further policies being sold each year.

In June 2008, a report from the Competition Commission concluded that consumers had been overcharged on PPI by £1.4bn a year. In the wake of this, Which? has been at the forefront of a tireless campaign to ensure that consumers are compensated for this misselling, much of which has come from high street banks.

In the past five years more than 1 million complaints have been made to firms over PPI. In 2009/2010 alone, customers referred nearly 50,000 complaints to the FOS.

Since then, the Financial Services Authority (FSA) has announced plans to implement stricter rules on how companies handle PPI complaints. 

Why are the banks stalling on PPI complaints?

On 8 October, the British Banker’s Association (BBA), the trade body that represents the UK’s banks, launched a legal challenge against the financial regulator’s plans for a tougher stance on PPI complaints.

Since then, almost all of the UK banking sector has stated that they will not review complaints affected by the judicial review but any other complaints not affected will be processed as usual.

Which? wants the banks to adhere to FSA rules about complaints handling and carry on dealing with complaints until they are instructed not to as part of an agreement, which is still to be reached with the FSA.

What does the regulator say about the banks’ response on PPI?

The FSA sets strict guidelines for financial institutions to deal with complaints. Banks have eight weeks to give a final response on a complaint, and if it has not done so after this time, it must write to its customer explaining why and provide them the opportunity to take their complaint to the Financial Ombudsman Service (FOS).

This is what banks are now doing with cases affected by the judicial review.

What should you do if you have a PPI complaint that’s affected?

If you think that you have been missold PPI, then submit a complaint using our online tool.

If you don't hear anything by the end of the 8 weeks, if your complaint is rejected or if the bank refuses to deal with your complaint, it's worth taking your case to the FOS, whose decision is binding on your provider. 

Do not wait for the judicial review to be completed before you put in a claim or refer your complaint to the FOS. Banks may seek to apply time-bars to prevent you making a complaint in the future.

Which? says

Which? chief executive Peter Vicary-Smith said: 'Banks should continue to deal with all PPI complaints.

'Using the judicial review as an excuse to put legitimate complaints on hold seems like a shameless attempt to duck out of giving consumers the redress they are entitled to.'

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