It claimed that the regulator has “completely underestimated” the resources that lenders will need to implement in order to comply with its demands to handle existing PPI complaints within eight weeks.
Charter UK warned that there will be “epic failures” across the industry to meet the FSA’s requirements unless they are relaxed.
The FSA’s guidance obliges firms to look at all previous PPI complaints to identify systematic failings in their sales procedures and complaints handling. Any consumers that could have been affected by the failings must be contacted and offered redress, regardless of whether they have complained.
Paul Clark, CEO of Charter UK, said that early reports suggest that remediation programmes will ahve to extend well beyond the budget and resources that have been set aside to handle compensation.
He said: “The three-to-eight week window that the FSA has allocated to resolve a complaint does not look achievable without major investment in systems and process improvements.”
Clark added: “The FSA guidelines in their current format are nigh-on difficult for the industry to achieve. If the guidelines are not reviewed, financial institutions need to urgently review the systems they have in place to deal with this problem.
“Those firms that have invested in dedicated complaints handling technology solutions are in a much better position to cope than those relying on legacy systems and processes – but we are going to see some epic failures across the industry if the guidelines are maintained in their current state.”
However, PPI claims management specialist Randall and Vickers has said that the major banks are “dragging their heels” on paying out compensation to consumers, with many customers waiting several months to get a pay out.
Michael Pilgrim, of Randall and Vickers, said: “I know of pensioners who have been forced to wait three months and more for a series of cheques which their bank claims were posted but have never materialised.
“There are others who were pleased to have settled the case five months ago, but are still waiting to see any cash from their banks.
“These are all people who have already been taken advantage of by the major banks, yet here they are being mistreated again and the watchdogs who are supposed to be there to protect consumers are doing nothing to help.”
He said that the Financial Ombudsman Service’s deadlines have been effective at making banks deal with PPI complaints quickly, but more needed to be done to speed up payments.
