They FSA has given Barclays, Lloyds Banking Group and RBS more time to deal with their backlog of payment protection insurance (PPI) complaints and the high volume of new complaints.
Under previous FSA rules, PPI complaints have to be responded to within eight weeks.
The new time extension will affect three categories of PPI complaints:
- PPI complaints still with the firm but put on hold during the recent judicial review will receive a decision by the end of August 2011
- Complaints received after the conclusion of judicial review but on or before the 31 August will be responded to within 16 weeks
- PPI complaints received on or after 1 September and before 31 December 2011 will be responded to within 12 weeks
The FSA has demanded that the three banks will have to keep PPI complainants and their customers fully informed. The regulator has also asked the banks to give the FSA regular compliance reports.
The FSA expects all PPI complaints handling to return to the eight-week standard by 1 January 2012 at the latest.
FSA interim managing director of the conduct business unit Margaret Cole said: “We want to see all PPI claims for compensation dealt with swiftly and appropriately. However some firms are facing a huge backlog and now a surge of new complaints which has created a bottleneck.
"It is not in the interests of consumers to receive further poor handling of their complaints as a result. This temporary extension means that these firms can process these complaints properly and fairly. We will be monitoring their progress carefully to ensure the new deadlines are met, that complaints are dealt with as promptly as possible and the backlog is cleared as a matter of urgency.”
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