Some big UK banks, including HSBC, have failed to hit an extended deadline to clear their backlog of Payment Protection Insurance (PPI) misselling complaints.

However, 97% of the 200,000 complaints not dealt with during the High Court judicial review earlier this year have now been resolved, with full offers of compensation sent out to valid complaints.

In June, HSBC, Barclays, Lloyds Banking Group and RBS were granted extensions to the usual eight-week resolution period, allowing them until 1 September to settle complaints unilaterally put on hold on or before 20 April 2011.

This followed the High Court loss, where banks failed to overturn new Financial Services Authority (FSA) rules to compensate those mis-sold PPI – to cover loan and credit card payments if you cannot work. understands that 194,000 of the cases put on hold have now been settled, with banks failing to resolve 6,000 within the restructured timeframe.

HSBC has admitted that not all of the letters confirming their final decisions will be sent out until 4 September, three days after the extended deadline.

Margaret Cole, interim managing director of the FSA’s conduct business unit, said:

"We are encouraged that most firms have used the time extension to clear the backlog of complaints received during the judicial review. In fact, over 97% of the complaints that needed a decision by August 31 have been dealt with.

"We will continue to work with firms to monitor their progress and compliance with the PPI complaint handling timescales during the course of the year."

Complaints made since April 20

Due to the massive volume of complaints about mis-sold PPI, banks negotiated varying resolution timescales, depending on the date of a complaint.

HSBC, Lloyds and RBS are under the following mandate:

  • PPI complaints still with the firm but put on hold during the judicial review had to be resolved by the end of August.
  • Complaints received after the conclusion of the judicial review (on April 20) but on or before 31 August must be resolved within 16 weeks.
  • All complaints received on or after 1 September and before 31 December must be resolved within 12 weeks.

The banks will also need to keep PPI complainants and their customers fully informed and provide the FSA with regular compliance reports.

The handling of PPI complaints should return to the requisite eight weeks by January 2012.

Barclays, which agreed in June to pay everyone on hold, no questions asked, has a slightly different mandate.

All PPI complaints received between 21 April and 31 July must be resolved within 16 weeks and complaints received between 1 August and 1 October have a 12-week deadline.

All new PPI complaints received after 1 October will fall within the standard eight-week resolution period.