The UK’s Competition and Markets Authority (CMA) said it has secured £975,000 ($1.3m) in refunds for Lloyds’ (LLOY.L) payment protection insurance (PPI) customers in the last year, with the latest refunds amounting to £17,000, for breaching the regulator’s rules.
Adam Land, senior director of remedies, business and financial analysis at the CMA, said: “It’s a real concern that PPI providers are still breaking the rules by sending inaccurate PPI reminders despite a clear, well-established order from the CMA. These failures can mean people end up paying for insurance they no longer need.”
All PPI providers are required to send customers annual reminders that set out clearly the cost of their policy, the type of cover they have and reminds them of their right to cancel.
Last year, the Financial Conduct Authority said that UK banks had paid £38bn for PPI mis-selling since 2011, with hundreds of millions paid out each month. It means PPI claims are now “the largest consumer redress exercise in the UK’s history,” it said
PPI was a form of insurance intended to help people maintain loan repayments if they fell on hard times. However, the product was aggressively marketed by banks in the 1990s and 2000s to help boost profitability. A 2011 court case ended the practice and opened the door for a wave of compensation claims from consumers..
The latest refunds come after Lloyds self-reported three breaches of this order to the CMA.
8,800 people were sent incorrect information in annual reminders to mortgage PPI customers.
For two of the breaches, the monthly amount policyholders can claim on their insurance was displayed in the incorrect section. In the third breach, this figure in the annual reminders was incorrect.
This is not the first time Lloyds has failed to comply with the order.
The bank has informed the CMA that it broke the order 18 times over an eight-year period.
The CMA has written publicly to Lloyds to ensure that the bank will contact all customers with an open policy, who were affected by the most recent breach, and offer refunds to those eligible.
The regulator said it “will monitor Lloyds’ commitment to issue refunds and will consider formal enforcement action should Lloyds fail to take the appropriate action agreed with the CMA.”
Land said it’s important all PPI providers take notice as it will continue to act if providers carry on breaking the rules.
The CMA can order companies to refund customers, it cannot impose financial penalties on businesses for breaches of this kind. However, it has called for the power to do so.
It believes this would allow it “to take quicker action against companies that break the law.”
“It would also allow it to increase the deterrent effect of its enforcement and make sure businesses take the obligations which the CMA imposes on them seriously for the benefit of UK consumers,” it explained.
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