The UK’s Competition and Markets Authority hasn’t pulled any punches in light of an unfolding consumer protection crisis involving Britain’s biggest banks, accusing Lloyds Banking Group of failure to provide customers accurate information for accounts with Payment Protection Insurance, a policy that’s now the eye of a huge mis-selling scandal.
The competition watchdog this week called on Lloyds to “put effective systems and procedures in place” after it breached a 2011 CMA market order — not once, but multiple times.
“We are disappointed that Lloyds has again failed to provide these important reminders or provide accurate data to its customers,” said Adam Land, the CMA’s senior director of remedies.
According to the CMA, Lloyds failed to send customers statutory reviews into PPI operations, providing customers with incorrect information about the scheme. This week’s orders from CMA force Lloyds to comply with the 2011 market order, but the damage to the Lloyd’s brand may already have been done.
Having been found to have breached the watchdog’s policy a total of six times in 2016, Lloyd’s has begun issuing apology letters to its customers. “We are writing to a small number of credit card customers whom we identified as having not received their annual PPI statements. Whilst we have resolved the cause of the issue, we are extremely sorry for any inconvenience caused. We will be contacting all affected customers,” said a spokesperson for the bank.
Lloyds isn’t the only bank to be caught in the CMA’s net, with Barclays similarly apologizing for giving customers seeking compensation for mis-sold PPI false information. Last month, the bank was forced to issue formal apologies after it was found to have told customers they didn’t hold PPI policies when they did.
When contacting the bank via a third party, a “very small percentage of customers” were given the wrong information, said Barclays in a statement, with the bank “proactively contacting” those affected in order to remedy the mishap.
“We would like to apologize to those customers impacted. Our complaints service and customer direct PPI checking services are not affected by this matter,” said a Barclays spokesperson.
The legal strife couldn’t have come at a worse time for Britain’s banks, with PPI turning into a major financial scandal after regulators ruled that millions of customers had been unnecessarily upsold the policies, which were designed to repay borrowings for people if their income fell due to extenuating circumstances. The ruling allowed for those affected to reclaim their costs, with banks and building societies subsequently putting aside some £46.5 billion (about $61 billion) in order to cover expected costs from the scandal.
What hasn’t yet been interpreted in monetary terms, however, is the blow to banks’ reputations delivered by the scandal. With a British public already up in arms about an emerging scamming crisis in the country, expedited by insufficient bank security systems, the issuance of apologies is only one small step to managing the current PR fallout.