Britain’s FCA Says Banks Must Review 2.5 Million PPI Complaints
The U.K. financial regulator asked banks to reassess 2.5 million payment-protection insurance complaints they previously rejected or potentially underpaid.
The Financial Conduct Authority requested lenders to review some claims after too many were rejected in late 2012 and early 2013 due to shortcomings in assessment criteria, the regulator said in a statement today. Firms have handled about 13 million complaints about wrongly sold loan insurance, upholding about 70 percent of cases and paying out more than 16 billion pounds ($26.5 billion), according to the regulator.
U.K. banks sold about 45 million PPI policies worth 44 billion pounds between 1990 and 2010, many of which were unsuitable for customers or banks overstated the benefits of the insurance, according to the FCA. At 10.4 billion pounds, Lloyds Banking Group Plc (LLOY) has set aside the most among British lenders to compensate clients, with Barclays Plc (BARC), the U.K.’s second-largest bank, provisioning 4.85 billion pounds.
Banks have contacted 3.2 million customers who may have been mis-sold PPI without filing a complaint and plan to send a further 2 million letters, the FCA said. The regulator expects to wind down monitoring of PPI to normal levels in 2015.
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