The banks will be given more time to deal with their backlog of PPI complaints and high volume of new complaints in order to ensure all grievances are handled properly, the FSA says.
Under normal FSA rules, PPI complaints have to be responded to within eight weeks, but the extension agrees a new timeframe for the firms to deal with the claims that have been put on hold and also agrees additional time for the firms to deal with PPI complaints received since the end of their involvement in the judicial review.
PPI complaints still with the firm but put on hold during the judicial review will receive a decision by the end of August, while complaints received after the conclusion of judicial review but on or before August 31 will be responded to within 16 weeks, and complaints received on or after September 1 and before December 31 2011 will be responded to within 12 weeks.
Strict conditions have been imposed on the temporary time extensions: the firms will have to keep PPI complainants and their customers fully informed and provide the FSA with regular reports on compliance.
The FSA expects all PPI complaints handling to return to the requisite eight-week standard by January 1 2012 at the latest.
It says the arrangement only applies to the three named banks and all other PPI complaints are unaffected.
Margaret Cole, interim managing director of the Conduct Business Unit at the FSA, says: “We want to see all PPI claims for compensation dealt with swiftly and appropriately.
“However, some firms are facing a huge backlog and now a surge of new complaints which has created a bottleneck. It is not in the interests of consumers to receive further poor handling of their complaints as a result.
“This temporary extension means that these firms can process these complaints properly and fairly.
“We will be monitoring their progress carefully to ensure the new deadlines are met, that complaints are dealt with as promptly as possible and the backlog is cleared as a matter of urgency.”
A number of firms decided to put some or all PPI complaints on hold when the British Bankers’ Association launched a judicial review of the FSA’s new PPI complaints handling measures. The FSA and the Financial Ombudsman Service won the case and the BBA decided not to appeal on May 9 2011.