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Santander UK faces criticism for bypassing PPI claims management firms

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Santander UK faces criticism for bypassing PPI claims management firms

Santander UK PLC is accused of attempting to reduce compensation payouts for mis-sold payment protection insurance by circumventing claims management companies, or CMCs, in its communications with customers, the Financial Times reported Sept. 11.

In a Sept. 9 email seen by the FT, the Banco Santander SA unit notified CMCs that it would begin sending important documentation directly to clients to streamline the process. Critics said the move would cut payouts as clients are less likely to respond to the bank within its time limits.

A spike in complaints in the run-up to the Aug. 29 deadline has pushed British banks' PPI provision bill to £50 billion. Lloyds Banking Group PLC warned it would earmark up to £1.8 billion in additional PPI provision, which prompted it to suspend the remainder of its £1.75 billion share buyback program for 2019. Barclays PLC said it expects to hike PPI provisions by as much as £1.6 billion, while Royal Bank of Scotland Group PLC will take up to £900 million in additional costs.

Santander UK is yet to indicate whether it would also book an additional charge, having spent £1.6 billion on PPI payouts so far.