The PFCA has worked with the BBA and the CMR
The PFCA has worked with the British Bankers Association (BBA) and the Claims Management Regulator (CMR) to agree a statement of principles for letters of authority, these set out the content to be included in a letter of authority. They have been announced in a statement from the BBA and in a CMR Bulletin 27, February 2016. The objective of this initiative is to set standards for CMCs which “will enable customers’ complaints to be handled efficiently by CMCs and financial service providers.” Resulting from this initiative are systems changes being made by a number of larger retail banks with the objective of implementing these principals by April 2016.
Consumers chose to authorise a third party with expertise
It is often the case in many areas of life; consumers choose to engage a third party to handle a piece of work on their behalf. This could be a technically difficult transaction such as conveyancing on a property contract, they could learn the skills needed to do a good job but do not have the time or inclination. Perhaps representing themselves in a Court or preparing their own firms accounts. These transactions are very different, but similar in that many consumers authorise a professional third party with the specific expertise to assist.
PPI is no different
Managing a Payment Protection Insurance [PPI] claim is no different. Consumers can manage their own claims, but hundreds of thousands of customers choose to engage the services of a professional third party to administer the claim for them, usually a Claims Management Company (CMC). Where a consumer engages a CMC they have to authorise the CMC to act on their behalf. This means that they are required to sign a letter of authority. In theory, the letter should and could be a simple one page document to authorise the third party to investigate whether they have been sold a PPI product with any of the product providers they have or had a relationship with, investigate whether any such policies were mis-sold and if so, mange the claim for compensation. Things are never that simple!
Rejected letters of authority, why?
Sadly, thousands of letters of authority have been rejected by product providers. This is not a criticism, it is a fact. A PPI complaint may be made against an organisation that the customer has no current relationship with, they may have moved address without telling the product provider or their signatures may have changed, in some cases the original sale of the PPI may have been many years ago. A product provider clearly has a duty to their current and past customers to identify that customer correctly and ensure that the third parties authority to act is valid.
Consumers should not suffer further detriment
The debate about the rights and wrongs of rejected letters of authority is not particularly relevant; the fact is many valid ones are inappropriately rejected. Sadly, a consumer always suffers detriment in these circumstances as they are made to go through significant hoops to prove who they are, where they live and that they are really the person who is the victim of the mis-sold product. Often this entails a visit to their nearest branch, which with recent branch closures is not always convenient. Clearly, it is unacceptable that consumers suffer further detriment when wishing to complain about a mis-sold product.
The PFCA engaged with the British Bankers Association
It is against this backdrop that the PFCA set about a series of discussions primarily with the British Bankers Association to see if a set of principles could be agreed. Clearly, the BBA do not represent all product provider types who mis-sold PPI, but banks make up a significant percentage of those who did and any agreement that could be reached with that group of product providers would have a positive effect on reducing consumer detriment.
Putting the consumer first – Aligning operational processes
The BBA and their members entered into and took part in the discussions in a collaborative and engaging way. Not surprisingly there were, at the start of these discussions, many different views. Both the banks and PFCA members had different operational needs and processes. Aligning these positions was never going to be easy. However, it was apparent from the discussions that all the different parties and organisations had the same end goal, putting customers first.
The work continues
The PFCA continues to work with the BBA and other organisations that are part of the complaint handling process, keeping this ‘in the spotlight’ to eliminate other areas of consumer detriment and to continually seek to improve working relationships between all parties.