The most recent figure issued by the Financial Conduct Authority (FCA), published 27 June 2013, shows that since January 2011 £10.1 billion has been paid back to customers who complained about the way they were sold Payment Protection Insurance (PPI). This follows £424 million being paid out for mis-sold PPI during April 2013; the May figures are not yet available. These figures come from 24 firms that make up 96% of complaints about the sale of PPI last year. This figure may appear huge, but to my mind the figures simply show how much more needs to be done.
The missing billions!
There are estimates that the final redress figure will be close to £25bn (which is almost double the £13bn that banks have put aside). So it seems that the amount of redress already paid out remains short of the provisions allocated to the problem by banks and not even half way towards the total estimated redress figure. The Financial Ombudsman Service (FOS) says, in respect of PPI, “It is expected to take years, not months, to sort out all the issues involved.” FOS is not wrong! Unless the value of redress paid out per month increases significantly the problem is still likely to be around over 3 years from now.
Data Subject Access Requests (DSAR) frustrating for all parties
The FCA rules relating to redress are shown in the redress handbook “DISP Dispute Resolution: Complaints” (DISP). Within DISP there is a specific section relating to “Handling Payment Protection Insurance complaints” (DISP App 3). Paragraph 3.4.3 of DISP App 3 relates to “Root Cause Analysis” (RCA) and requires a firm to “consider whether it is fair and reasonable for the firm to undertake proactively a redress or remediation exercise, which may include contacting customers who have not complained.” It seems to me that if individual banks have not carried out RCA the FCA should require them to do so now. It is fair and reasonable for such reviews to take place and there is a risk of significant consumer detriment when they are not undertaken. A robust RCA should, in particular, identify the customers who have been sold PPI, because it is not always clear from the documents in a customer’s possession that PPI was arranged – even when it was. All too often, such information is only identified after a Data Subject Access Report (DSAR) has been obtained. The requirement to obtain the correct information by obtain a DSAR is at best frustrating for all parties and at worst delays appropriate redress.
With the risk that customers may not be aware that they have been sold PPI a proactive approach has to be the answer. Such processes may mean that FOS and I can reduce our estimated timescale for solving the PPI mess.