Royal Bank of Scotland Group Plc (LON:RBS) has been ordered by the UK’s Competition and Markets Authority (CMA) to appoint an independent body to audit its payment protection insurance (PPI) processes. Such an order has also been issued to RBS rival Santander. The two banks failed to notify thousands of customers about their PPI policies, the competition watchdog said today in a statement.
“Following an investigation into PPI by the Competition Commission in 2011, a legally-binding Order was put in place, which requires – among other things – that customers receive an annual reminder from their PPI provider that clearly sets out how much they’ve paid for their policy, the type of cover they have, and reminds them of their right to cancel,” the CMA explained.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
However, RBS failed to send reminders to nearly 11,000 of its customers for up to six years, the regulator also said. According to the watchdog, this prevented the affected from making an informed decision on whether they wanted to continue to pay for the service.
Meanwhile, Santander provided annual reminders containing incorrect information to over 3,400 of its mortgage PPI customers from 2012–2017.
The CMA noted that this was not the first time RBS and Santander failed to meet the requirement. The watchdog warned the two banks to improve their PPI practices in 2016.
“It is unacceptable that some banks aren’t providing PPI reminders – or are sending inaccurate ones – 8 years after our Order came into force. The legally binding directions we’ve issued today will make sure that both RBS and Santander now play by the rules,” said CMA’s senior director of remedies, business and financial analysis Adam Land. “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.”
The news hasn’t affected RBS’s performance today. As of 10:20 BST, the RBS price stood at 187.00 GBX, according to data from Google Finance. The company shares have gain 1.9% since the start of the session.