Now banks exploit a new payment protection loophole

Tens of thousands of customers who have had complaints about payment protection insurance (PPI) rejected could be denied justice despite banks finally admitting to widespread mis‑selling.
Last week banks dropped their legal fight with City watchdog the Financial Services Authority (FSA) which had ordered them to compensate those who had been mis-sold PPI dating back to the start of 2005. Up to 6.4 million customers could be in line to share a payout worth around £9 billion.
Now it has emerged that some banks are hiding behind rules which state that they don’t have to investigate any complaint they have already rejected.

Loophole: Tens of thousands of customers who have had complaints about payment protection insurance rejected could be denied justice despite banks finally admitting to widespread mis¿selling

Anyone who has a formal complaint rejected must take their appeal to the Financial Ombudsman Service within six months.
If they don’t, then the complaint lapses and they lose all chance to appeal unless there are exceptional circumstances such as long-term illness, being out of the country or if the lender failed to tell them of their right to use the Ombudsman.

Some banks routinely fobbed off PPI complaints for years - and around 70 pc of customers did not take their complaint to the Ombudsman.
Even though they may have had a valid case, those customers may now miss out on compensation.
Santander says it will not consider compensating any customers who have already had their complaint rejected.
State-backed RBS and NatWest say they will offer redress ‘in line with the standards the FSA now requires’ — which does not include complaints already rejected.
Lloyds Banking Group, which includes Halifax and Cheltenham & Gloucester, simply says that customers should contact them directly.
Barclays and HSBC, on the other hand, say that customers who have already been dismissed should get in touch again because the banks are now assessing complaints differently.

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