FINED FOR POOR COMPLAINTS HANDLING
"The Financial Conduct Authority (FCA) has issued its largest ever retail fine (£117m) to Lloyds Bank Plc, Bank of Scotland Plc and Black Horse Ltd (together Lloyds) for failing to treat their customers fairly when handling Payment Protection Insurance (PPI) complaints between March 2012 and May 2013."
"In March 2012, Lloyds issued guidance instructing complaint handlers that the overriding principle when assessing complaints was that Lloyds’ PPI sales processes were compliant and robust unless told otherwise (the Overriding Principle)"
Source: www.fca.org.uk
FINDINGS
1. The overriding Principles were abused and cases were closed without thorough investigations.
2. Below are four common examples found by the authority on customer's cases who were unfairly rejected.
3. PPI (Payment Protection Insurance) is a credit insurance coverage tie to loans or credit cards to insure repayment in the event of borrower's death or inability to pay the loan. The product is usually sold along with the sales process and finalized in the approval letter.
SUMMARY OF CASES
Case 1
1. Customer complaint of being mis-sold a PPI during the application of loan.
2. Handler did not access all relevant information relating to sales process. Handlers were not provided with information in the sales process.
3. Subsequently Handler rejected customer's complaint on basis that sales process used were robust.
4. Letter sent to customer indicating handler has "fully investigated" and given "appropriate weight and balanced consideration to all available evidence".
Case 2
1. Handler did not successfully contact customer for additional info and or request for a copy of credit agreement. Handler reject complaint on basis "no evidence to support allegations and sales process was robust".
2. Handler rejected customer's complaint who was mis-sold PPI without consent to include PPI in the credit card.
3. Letter was sent indicating sales process would be required and conducted prior to agreeing to PPI policy.
Case 3
1. Handler was unable to contact complaining customer after trying 3 attempts using customer's home and mobile number and rejected the case the same day.
2. Handler recorded "Allegations are unspecific and offer little information. No evidence to suggest customer was treated unfairly."
Case 4
1. Customer was told by branch sales staff that PPI was required for loan approval.
2. No documentation to indicate handler investigated the allegations.
3. Records stated customers would receive T&C of loans with option to reject PPI coverage.
4. Letter was sent to customer informing of rejection of case.
ISSUES NOTED
1. A summary of lapses as follow:-
- Handlers did not obtain further clarification from customer prior to closing cases.
- Handlers did not obtain further information from sales staffs prior to closing cases.
- Proof of consent by customers were not obtained by handlers.
2. Internal reviews (by assurance functions) on the process of complaints handling to support the handler's conclusion most likely left out the following scope.
-Whether documents were actually sighted by handlers
-Further interview with sale staffs were conducted by handlers
-Conversation with the customers were recorded and actually took place.
-Documents signed/acknowledge by customer were sighted by handler.
-Gaps in entire complaints handling process.
3. The turn-around-time of closing cases within a day indicates a red flag in the complaints handling process.
4. Inducement of cross-selling/up-selling products using deceit is frequent among customers who are ill-informed.
4. Company's assurance functions (Risk, compliance & audit) did not cover the areas thoroughly.
5. Sales process should include proper filling of documented consent for reference.
6. SOP governing the Overriding Principle should include authority limits and criterias prior to exercise.
"In March 2012, Lloyds issued guidance instructing complaint handlers that the overriding principle when assessing complaints was that Lloyds’ PPI sales processes were compliant and robust unless told otherwise (the Overriding Principle)"
Source: www.fca.org.uk
FINDINGS
1. The overriding Principles were abused and cases were closed without thorough investigations.
2. Below are four common examples found by the authority on customer's cases who were unfairly rejected.
3. PPI (Payment Protection Insurance) is a credit insurance coverage tie to loans or credit cards to insure repayment in the event of borrower's death or inability to pay the loan. The product is usually sold along with the sales process and finalized in the approval letter.
SUMMARY OF CASES
Case 1
1. Customer complaint of being mis-sold a PPI during the application of loan.
2. Handler did not access all relevant information relating to sales process. Handlers were not provided with information in the sales process.
3. Subsequently Handler rejected customer's complaint on basis that sales process used were robust.
4. Letter sent to customer indicating handler has "fully investigated" and given "appropriate weight and balanced consideration to all available evidence".
Case 2
1. Handler did not successfully contact customer for additional info and or request for a copy of credit agreement. Handler reject complaint on basis "no evidence to support allegations and sales process was robust".
3. Letter was sent indicating sales process would be required and conducted prior to agreeing to PPI policy.
Case 3
1. Handler was unable to contact complaining customer after trying 3 attempts using customer's home and mobile number and rejected the case the same day.
2. Handler recorded "Allegations are unspecific and offer little information. No evidence to suggest customer was treated unfairly."
Case 4
1. Customer was told by branch sales staff that PPI was required for loan approval.
2. No documentation to indicate handler investigated the allegations.
3. Records stated customers would receive T&C of loans with option to reject PPI coverage.
4. Letter was sent to customer informing of rejection of case.
ISSUES NOTED
1. A summary of lapses as follow:-
- Handlers did not obtain further clarification from customer prior to closing cases.
- Handlers did not obtain further information from sales staffs prior to closing cases.
- Proof of consent by customers were not obtained by handlers.
2. Internal reviews (by assurance functions) on the process of complaints handling to support the handler's conclusion most likely left out the following scope.
-Whether documents were actually sighted by handlers
-Further interview with sale staffs were conducted by handlers
-Conversation with the customers were recorded and actually took place.
-Documents signed/acknowledge by customer were sighted by handler.
-Gaps in entire complaints handling process.
3. The turn-around-time of closing cases within a day indicates a red flag in the complaints handling process.
4. Inducement of cross-selling/up-selling products using deceit is frequent among customers who are ill-informed.
4. Company's assurance functions (Risk, compliance & audit) did not cover the areas thoroughly.
5. Sales process should include proper filling of documented consent for reference.
6. SOP governing the Overriding Principle should include authority limits and criterias prior to exercise.
