Santander UK has been accused of trying to reduce the amount it pays out to victims of PPI mis-selling by cutting professional claims management companies out of its communications with customers.

A deluge of last-minute complaints has hit Santander and profits across the UK banking sector.

Claims management companies, CMCs, which handle customer complaints in exchange for a cut of any compensation payout, drove a massive influx of inquiries from potential victims. This was ahead of a deadline for complaints about the insurance at the end of last month.

Santander told CMCs on Monday evening that it would start sending key documentation directly to customers instead of going through them, according to an email seen by the Financial Times.

The bank said the move was designed to “streamline our investigations”, but critics said the strategy would reduce compensation payouts as individual customers are less likely to respond to correspondence within banks’ time limits.

Simon Evans, chief executive of the Alliance of Claims Companies, said: “It’s a particularly underhanded move because there are many consumers who wish to use a third party to help and assist them in their claims, and they’re happy to pay to do so . . . Who are Santander to ignore the authority given by customers [to CMCs] and say they will no longer deal with the third party?”

Alliance of Claims Companies is a collective group of CMCs, set up to improve customer service and promote best practice.

Santander said: “Following the PPI claim deadline, we have made a small change to our PPI questionnaire process in order to ensure a quicker outcome for customers. We continue to recognise the important role in the process played by CMCs and keep them fully informed whenever we request further information directly from a customer.”

Several banks have complained that the bulk of CMCs’ late submissions were low-quality inquiries, the vast majority of which never lead to a formal complaint and compensation.

The last-minute rush of complaints has pushed the total cost of Britain’s largest banking scandal above £50bn.

Santander, which has spent £1.6bn on PPI redress, has yet to say whether it will set aside more money after the late influx. The bank had to give customers an extra day to submit complaints last month after the volume of inquiries crashed some of its systems on the deadline day.

In a further sign of the strain the deadline has put on banks’ systems, the Co-Operative Bank wrote to CMCs on Monday warning that it would not be able to answer some inquiries within its original time limits.

The bank previously promised to respond to information requests, preliminary inquiries to check if a customer could be entitled to compensation, within 30 days.

In an email to CMCs on Monday, however, it said “in the near future we anticipate it may take us longer than 30 days and up to 90 . . . due to the large volumes of requests that we have received”.

The Co-Operative Bank said: “Our focus is to manage all PPI inquiries as effectively as possible and we provided this clarity to help manage the expectations of those who had submitted a claim.”

Banks were hoping the August deadline would allow them to draw a line under a scandal that dragged on profits and share prices for almost a decade, but few were prepared for the extent of the surge in complaints in August. Some banks received as much as three months’ worth of complaints in 24 hours on the final day.

The full extent of provisions required will depend on what proportion of the large volume of information requests are converted into full complaints.

A senior executive at one bank said: “It will certainly take us into the beginning of next year just working our way through it all and making sure that we’ve completed it correctly and accurately. I would think it will be somewhere between the first and second quarter of next year until we’ve wrapped everything up.”


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