FSA extends PPI payout times

The Financial Services Authority has granted Barclays, Lloyds Banking Group and the Royal Bank of Scotland temporary time extensions to handle payment protection insurance complaints.

The regulator said last year that all banks must compensate customers who were mis-sold PPI, which could cost a total of £4.5bn.

The British Bankers’ Association appealed the decision so many cases were put on hold while the outcome of the judicial review was pending.

But in April the High Court dismissed the appeal.

Under FSA rules, PPI complaints must be responded to within eight weeks. But the FSA has given firms until August 31 to grant a decision on those complaints put on hold during the judicial review.

Complaints received after the end of the judicial review, but on or before August 31, must be responded to within 16 weeks. Complaints received on or after September 1 and before December 31, 2011 will be responded to within 12 weeks.

The FSA expects PPI complaints handling to return to the eight-week standard by January 1 2012.