RBS rapped by watchdog over PPI customer failures

● Santander also singled out by CMA as deadline for submitting claims nears

Royal Bank of Scotland has been rapped over the knuckles by the competition watchdog over its handling of payment protection insurance (PPI) compensation.

The Edinburgh lender failed to provide annual PPI reminders to almost 11,000 customers for up to six years, according to the Competition and Markets Authority (CMA).

It means that those affected were unable to fully assess whether they wanted to continue paying for PPI, and were stopped from shopping around effectively. Many customers may not have even been aware they still had PPI, the watchdog added.

The CMA has ordered RBS and fellow high street lender Santander to appoint independent auditors to check how they remind customers who have PPI.

Santander was found to have sent out annual reminders which contained incorrect information to more than 3,400 mortgage PPI customers from 2012 to 2017.

The failures contravene an order made in 2011 following the Competition Commission’s investigation into PPI, which required providers to send customers an annual reminder setting out how much was paid for their policy, the type of cover they had and their right to cancel.

It is not the first time that RBS and Santander have breached the order, with both banks being warned by the CMA to improve their PPI practices in 2016.

PPI policies were intended to cover missed debt repayments and were frequently marketed to consumers using aggressive tactics. RBS has made provisions totalling more than £5 billion so far for the scandal, although the lender most affected by PPI has been Bank of Scotland owner Lloyds Banking Group.

The CMA intervention comes with just one week left for customers to make a complaint about PPI to their provider or risk missing out on the chance of a refund. The deadline for making a claim is 11.59pm on 29 August.

Adam Land, the CMA’S senior director of remedies, business and financial analysis, said: “It is unacceptable that some banks aren’t providing PPI reminders – or are sending inaccurate ones – eight years after our order came into force.

“The legally binding directions we’ve issued will make sure that both RBS and Santander now play by the rules.

“These are serious issues that, in the future, may result in fines if the government gives us the powers we’ve asked for.

“For now, we expect RBS to repay all affected customers quickly, and for both RBS and Santander to make sure that similar breaches do not happen again.”

RBS notified the CMA of the breach by 20 April last year, while Santander notified the watchdog of its breach on 15 October.

The CMA stressed that it does not currently have the power to impose financial penalties for breaches of this kind.