The U.K. Competition and Markets Authority took action against Royal Bank of Scotland Group PLC and Banco Santander SA, which operates in Britain as Santander UK PLC, for failing to provide and sending incorrect annual reminders to their payment protection insurance customers.
The CMA has issued directions to both lenders to appoint independent bodies to review and audit their PPI processes to prevent similar incidents in the future. The lenders were also previously warned in 2016 to improve their PPI practices.
The competition regulator's legally binding order related to PPI was implemented in 2011, and among its requirements were that PPI providers should write to customers each year to tell them how much they had paid and that they have a right to cancel a policy.
The regulator said RBS failed to provide reminders to nearly 11,000 customers for up to six years. Affected clients were thus unable to fully assess whether they wanted to continue paying for PPI, while many others could have been unaware they still had such insurance. The CMA noted that RBS has written to affected customers and has so far paid out more than £1.5 million in refunds.
Meanwhile, Santander UK breached the order by sending inaccurate annual reminders to more than 3,400 mortgage PPI customers from 2012 to 2017, according to the authority.
The results of the audits will be sent back to the CMA.
