UK banks fail to meet timetable for loan insurance claims, regulator says

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© Reuters. FILE PHOTO: A sailing boat moves past the Canary Wharf financial district on the River Thames in London© Reuters. FILE PHOTO: A sailing boat moves past the Canary Wharf financial district on the River Thames in London

LONDON (Reuters) – Britain’s banks may not be able to deal with their remaining complaints about mis-sold loan insurance until next summer, the Financial Conduct Authority said on Wednesday.

Banks had hoped to draw a line under a decade-long scandal by the end of this year.

Loan insurance, or payment protection insurance (PPI), is Britain’s costliest retail financial scandal. Banks have paid out more than 43 billion pounds ($54.64 billion) in compensation so far.

“We are aware that the volume of PPI checking enquiries and complaints sent to firms increased significantly during August 2019 in the run-up to the complaints deadline on 29 August,” the FCA said in a statement.

Banks have said they received hundreds of thousands more complaints than they expected in August.

“As a result, firms will not be able to meet their normal complaint handling times,” the FCA said.

A number of firms have said that customers may not get a final response to their claim until summer 2020, the watchdog said.

“We are challenging firms to deal with these complaints as quickly as is reasonable, given the very large volumes,” the FCA said.

Claims will be entitled to interest on the amount due, typically 8%, which will include the length of time it took to respond.

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