Britain’s Competition and Markets Authority (CMA) has forced Paymentshield to pay £380,000 compensation to hundreds of customers for breaches of PPI rules with further payments expected in the near future.
The regulator is now seeking powers from the government to fine firms that breach the rules.
The insurance company had previously been investigated in 2011 by the Competition Commission who put an order in place to ensure the firm gave its customers annual reminders that they held a PPI policy.
The reminder had to clearly set out how much they were paying for the policy, the type of cover they had and remind them of their legal right to cancel.
Paymentshield admitted to the CMA in 2016 that they hadn’t sent such letters to 3,000 customers and received a public warning letter for the offence.
Since then the regulator has identified two further lapses between 2013 and August 2019.
On one occasion 604 customers never received their letters and in the second 22 only received statements every two years instead of annually.
The CMA has now ordered the firm to introduce a system which checks that annual reminders are accurate and have been sent. An independent auditor must also be put in place.
The company has already paid more than £380,000 in compensation to affected customers and a further £170,000 in repayments are expected.
Customers have been given the choice of continuing with their policy or cancelling it in order to receive their compensation.
CMA spokesman Adam Land said: “It is unacceptable that Paymentshield has again broken our Order by failing to send customers vital information about their PPI policies.
“The legally binding directions we’ve issued today will make sure this doesn’t happen again, and we expect the company to repay those affected quickly.
“These breaches are serious and, if we had the extra powers we’ve proposed to the government, could have resulted in fines.”
The regulator currently does not have the power to impose fines for breaches like these.
It has appealed to the government to grant them , saying having them would allow quicker action to stop companies breaking the law.