"Serious problems" with the way some firms handle complaints about mis-sold payment protection insurance have been uncovered by the Financial Conduct Authority.
The FCA found issues in the way PPI complaints were dealt with at 12 medium and small-sized high street banks, building societies, credit card providers and personal loan companies. (See our Reclaim PPI for Free guide for help getting your money back.)
In total, the watchdog studied 18 firms, which together account for 16% of all PPI complaints. None of them have been named, but one firm could face a ban or fine.
Each firm submitted a sample of 50 PPI complaints, including 40 that had been rejected and 10 that had been upheld.
Of the 12 firms where serious problems were found, the FCA said it disagreed with 60% of rejected cases and had concerns with the redress offered in 43% of upheld cases.
One of the firms has been referred to the FCA's enforcement division for further action, while the watchdog is considering what to do about other companies.
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£11.5 billion total PPI bill
The remaining six firms were found to "generally" be delivering fair outcomes on PPI complaints. The FCA disagreed with less than 8% of rejected complaints, and had concerns about 21% of redress offers in upheld cases.
The FCA says it's "working closely" with firms to help improve their complaint handling processes. It's also been assessing how larger firms deal with complaints, although it has not set a date for when these findings will be published.
£528 million was paid back to customers who complained about the way they were sold PPI in July this year. It's the highest monthly sum this year, and takes the total paid out since January 2011 to £11.5 billion.
Fight unfair rejections
MoneySavingExpert.com campaigns co-ordinator Wendy Alcock says: "It's become par for the course to hear about the poor handling of PPI complaints.
"We’ve already seen there are problems at big banks such as Lloyds, and now we’re seeing other lenders are also playing fast and loose with their responsibility to pay back the money they shouldn’t have taken in the first place.
"This review looked at a limited number of firms, but the practices are likely to be replicated across the board.
"Our message continues to be that anyone who has a PPI claim rejected by any lender shouldn't let that put them off. A rejection is only a rejection if it's from the Financial Ombudsman Service. It's the only place to get a fair hearing."
Clive Adamson, director of supervision at the FCA, says: "We expect firms to deliver fair outcomes to PPI complaints. In our review, we found that some firms are doing this while it is clear others still have some way to go.
"I am encouraged that the firms in the scope of our review have taken immediate steps to put in place the necessary remedial measures and I expect them to ensure they have robust processes in place to work through the remaining complaints, so that eligible complainants can be paid out as quickly as possible."