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Lloyds bank fine

Banks had been fined by the city watchdog for delaying gripes regarding Payment Protection Insurance (PPI), whilst some of them were on alert to face similar actions.

The banks had failed to process a considerable proportion of gripes because of a legal fight between the Financial Services Authority (FSA) and banks regarding how the issue must be handled, which was ultimately won by the regulator.

The watchdog said that, regardless of instructions to process the claims, banks had put in place a policy, which was likely to lead to gripes not being dealt with fairly and rapidly.

Several banks had put complaints on hold whilst a judicial challenge-that was led by the British Bankers Association- was ongoing regardless of the FSA warning the banking industry that claims must be processed as normal.

In a letter to the banks the FSA had said that, they had become aware that certain firms were placing on hold roughly around all the PPI complaints, citing the judicial review as a reason.

These delays were very common amongst the banks and the fine today could open up an entirely brand new chapter in the mis-selling scandal. The FSA had denied commenting on whether every firm was facing the same action or financial penalty for causing a delay in the claims process. To this they added that, they’ll continue to take action if they find that PPI consumers haven’t been dealt with justly.

Some of the biggest banks had already set aside billions of pounds in order to compensate the customers who were mis-sold policies, which was expected to rise further.

PPI is the most criticised about product, which the Financial Ombudsman Service (FOS) had ever seen. The service that resolves disputes between financial institutions and customers had previously condemned insurers and banks for subjecting customers to delay and inconvenience.

According to Tracey McDermott, the FSA’s director of enforcement and finance crime, FSA had made it very clear that every firm has to continue to process gripes wherever possible during the ongoing judicial review and they had even warned that enforcement action would be taken if this wasn’t done.

Regardless of the warning, several banks had put in place a policy, which has lead to gripes not being dealt with correctly during the legal procedures.

The FSA had mentioned that none of the claimants had suffered from a financial loss, but it meant that a considerable amount of people had experienced a hold-up for no good reason.

Banks had acknowledged that they had not lived up to their reputation for “doing the right thing” by consumers in this instance, but said that they’re confident enough that there won’t be any repeat of delays in the process.

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