The Competition and Markets Authority (CMA) said RBS failed to provide reminders – which sets out how much they have paid to date and their right to cancel – to almost 11,000 of its customers for up to six years.
That meant those affected were unable to fully assess whether they wanted to continue paying for PPI, and were stopped from shopping around effectively. Many customers may also not have even been aware they still had PPI.
The CMA said it expects RBS to now repay all affected customers quickly and has ordered the two banks to appoint an independent body to audit their PPI processes.
They must also put in place procedures to ensure that similar incidents do not happen again.
In addition, RBS has now written to those affected, providing a reminder of their right to cancel their policy and has so far paid out over £1.5 million in refunds to customers.
Following an investigation into PPI by the Competition Commission in 2011, a legally binding order was put in place, which requires – among other things – that customers receive an annual reminder from their PPI provider that clearly sets out how much they’ve paid for their policy, the type of cover they have, and reminds them of their right to cancel.
Santander breached the order by sending out annual reminders containing incorrect information to over 3,400 of its mortgage PPI customers from 2012-2017.
This is not the first time RBS and Santander have breached the order, with both banks being warned by the CMA to improve their PPI practices in 2016.
Adam Land, the CMA’s Senior Director of Remedies, Business and Financial Analysis, said: “It is unacceptable that some banks aren’t providing PPI reminders – or are sending inaccurate ones – eight years after our order came into force. The legally binding directions we’ve issued today will make sure that both RBS and Santander now play by the rules.
“These are serious issues that, in the future, may result in fines if the Government gives us the powers we’ve asked for. For now, we expect RBS to repay all affected customers quickly, and for both RBS and Santander to make sure that similar breaches do not happen again.”