CT Capital failed to implement processes designed to follow specific provisions governing the handling of PPI complaints for 11 months
It is very difficult, if not impossible to feel any sympathy towards CT Capital Ltd, who today have been fined £2.3m by the Financial Conduct Authority (FCA) for serious failings in its historic payment protection insurance (PPI) complaint handling processes which resulted in the firm refusing genuine PPI claims.
CT Capital was the parent company of a group of lenders and loan brokers and was responsible for handling PPI complaints on behalf of the group. The firm had already disclosed in its latest company accounts that it was “at risk” of sanctions or fines from the Financial Conduct Authority (FCA), following a thematic review into its handling of PPI complaints in 2012.
Between 2005 and 2008, the group had sold 31,591 regulated PPI policies, receiving approximately £63 million net in commission, further showing just how profitable the sale of PPI policies were to the industry. Despite being aware that there were specific provisions governing the handling of PPI complaints and that they came into force in December 2010, CT Capital failed to put in place these processes until November 2011.
Even after that time, CT Capital operated flawed policies. In particular, it directed its complaints handlers that failures in the sales telephone calls need not lead to a complaint being upheld if the subsequent sales documentation outlined the matters clearly. It also failed to provide its complaint handlers with sufficient guidance on how to consider whether sales advisers had taken reasonable care to ensure that the PPI policies they recommended were suitable for the customers.
Along with inadequate systems for assessing its PPI complaint handling processes, monitoring the fairness of customer outcomes, it also failed to adequately analyse decisions of the Financial Ombudsman Service or to use them to inform its ongoing complaint handling processes.
The FCA said until January 2013, CT Capital operated an inappropriate policy in relation to rejecting complaints on the basis of age (time bar) which failed to take into account when a customer may have become aware (or ought reasonably to have become aware) of the cause for complaint. Between May 2011 and November 2013, the firm handled 6,669 PPI complaints.
Due to these failings customers of the CT Group of lenders and loan brokers missed out on redress payments to which they were entitled because the firm failed to processes PPI complaints appropriately. Furthermore, the firm failed to fully train its staff who handled customers complaints, and call handlers were also encouraged to dismiss cases even if the original sales call was questionable, on the basis that full details of the insurance policy were sent out through the post afterwards.
Mark Steward, director of enforcement and market oversight at the FCA said: “Failing to handle complaints appropriately means that firms risk treating customers unfairly for a second time and it’s important that firms get this right.
“We have taken action against firms on numerous occasions and there’s no excuse for firms continuing to get it wrong. We remain determined to ensure that firms put right the harm caused by PPI mis-selling and regain the trust of the public. We will continue to monitor how firms are dealing with complaints and will not hesitate to take action where we see firms not complying with their obligations.”
With the average redress payment made in respect of a fully upheld complaint during the period being £5,959, the impact on individual customers could have been “significant”, the FCA stated.
Following feedback from the FCA in 2013 CT Capital undertook a substantial remediation exercise – as outlined in ther company accounts – which involved developing a revised PPI complaint handling process and reviewing approximately 4,800 complaints which had been rejected or in respect of which full redress had not been paid. By January 2016, CT Capital had paid approximately £74 million (including interest) in redress arising from PPI complaints.
The FCA found that CT Capital breached Principles 3 (management and control) and 6 (customers’ interests) of the FCA’s Principles for Businesses. CT Capital agreed to settle at an early stage of the FCA’s investigation and therefore qualified for a 20% (stage 2) discount. Were it not for this discount, the FCA would have imposed a penalty of £2,951,179 on the firm, the FCA said in a statement.
The FCA continues to take the issue of PPI complaints handling seriously. Last year, the FCA fined Clydesdale Bank Plc £20.6 million and imposed the largest ever retail fine of £117 million on the Lloyds Banking Group for failing to handle PPI complaints fairly.
There doesn’t seem to be an end in sight for the PPI, with the scandal potentially going on for years. This concern has been addressed by the FCA who has undertaken a consultation on a proposed two-year deadline for consumer complaints, which is expected to be concluded shortly. The consultation is implemented might help finally bring to a close the PPI scandal.
However, if you are one of the customers who bought PPI decades ago could but as yet have failed to seek redress, you may have to act quickly as consumers could still be sat on substantial claims, thanks mainly due to accumulated interest at 8 per cent per annum.