Royal Bank of Scotland (RBS) and Santander are back in the regulator's bad books just weeks before the deadline for payment protection insurance (PPI) claims at the end of this month.

The Competition and Markets Authority (CMA) has ordered both banks to appoint independent bodies to audit their PPI processes after finding they failed to comply with its previous instructions.

Back in 2011 the Competition Commission, as the CMA was then known, issued a legally-binding order requiring the banks to send their customers an annual reminder from their PPI provider that clearly set out how much they had paid for their policy, the type of underlying credit policy, the level of cover and a reminder of their right to cancel.


The CMA has since found that RBS failed to send reminders to almost 11,000 customers for up to six years, meaning that those affected were 'unable to fully assess whether they wanted to continue paying for PPI and were stopped from shopping around effectively’.

Worse, many RBS customers may not even have been aware that they still had a PPI policy.

This isn't their first offence, either. Both banks breached the 2011 investigation order in 2016 and were warned at the time about their non-compliance.

The CMA is clearly not impressed. ‘It is unacceptable that some banks aren’t providing PPI reminders – or are sending inaccurate ones – eight years after our order came into force. These are serious issues that, in the future, may result in fines.’

For now the CMA doesn’t have the power to impose financial penalties on firms which breach its orders but it is lobbying the government ‘in order to increase incentives for businesses to comply with market and merger remedies and to rectify any breaches quickly’.

As of the end of 2018 the banks had set aside over £40bn in compensation for PPI cover mis-sold to loan and credit-card customers who didn’t want or need it. RBS had set aside £5.3bn as of last December while Lloyds (LLOY), the worst offender, had set aside over £19bn.

Shares in RBS shrug off the news, however, rising 0.9% to 185p, helped by the firmer tone in markets heading into the weekend.

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Issue Date: 23 Aug 2019