RBS and Santander have been told to appoint independent bodies to monitor their payment protection insurance processes after falling foul of competition rules for the second time since 2016.
The UK’s competition watchdog said on Friday the two banks had either failed to send or had sent out inaccurate annual PPI reminders, in breach of a 2011 order that followed the major PPI mis-selling scandal that developed over a period of decades.
The Competition and Markets Authority said RBS had failed to provide reminders to almost 11,000 of its customers for up to 6 years, meaning those affected were unable to fully assess whether they wanted to continue paying for PPI.
Banks must tell customers annually how much they have paid for their policy, inform them of the type of cover they have and remind them of their right to cancel.
Santander sent out reminders but 3,400 of its mortgage PPI customers received inaccurate information between 2012 and 2017. Both banks have been told to appoint auditors and report back on their progress to the watchdog.
In 2016 both banks were slapped on the wrist by the regulator for breaching the rules, and two years later Barclays and Lloyds were told to improve their PPI procedures too.
RBS has written to affected customers, the CMA said, reminding them of their right to cancel their policy. The bank has so far paid out over £1.5m in refunds.
The CMA does not currently have the power to impose fines on companies directly but is seeking such powers from the government.
A Santander spokesperson said customers “were not financially impacted” and the bank has taken steps to make sure the issue does not happen again.
“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.”
Adam Land, the CMA’s senior director of remedies, business and financial analysis, said: “These are serious issues that, in the future, may result in fines if the government gives us the powers we’ve asked for.
“It is unacceptable that some banks aren’t providing PPI reminders — or are sending inaccurate ones — 8 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.”
Banks are still reeling from the fallout from the PPI mis-selling scandal, which resulted in lenders being forced to compensate customers for policies they were mis-sold over a period of decades in some cases.
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