The U.K.’s markets regulator is investigating allegations that banks are dismissing claims for payment protection insurance compensation.
The Financial Conduct Authority has at least two separate probes in progress, Martin Wheatley, the chief executive officer of the agency, told lawmakers in London today when asked about the FCA’s plans for pursuing banks involved in the PPI scandal.
U.K. banks have set aside around 15.5 billion pounds ($24.3 billion) to compensate customers who were wrongly sold payment-protection insurance that they didn’t need. Lloyds Banking Group Plc was fined 4.3 million pounds by the regulator in February for failing to pay as many as 140,000 customers on time. The lender’s system couldn’t keep up with the volume of claims, the regulator said.
The watchdog has “two large investigations underway,” into whether banks are failing to properly deal with PPI complaints, Wheatley said.
The payment-protection scandal is one of at least three mis-selling scandals facing U.K. banks.
Lenders may also have to pay out billions over the improper sales of identity-theft insurance products and derivatives to hedge the effect of interest rate changes.
Banks have so far agreed to pay out 500,000 pounds in compensation to customers who were improperly sold derivatives, with thousands of claims still under review.
Wheatley also said that the payments are “coming along more slowly than we wanted.”
The majority of PPI products were sold correctly and represented “good value” to customers, Lloyds’s ex-Chief Executive Officer Eric Daniels told lawmakers earlier this year.
The bank’s sales practices put it “on the side of the angels,” Daniels said in evidence to the Parliamentary Commission on Banking Standards.