Post: Lenders choosing to send responses by snail mail
A law firm representing huge numbers of people with car finance mis-selling claims has accused lenders of “systemic obstruction”.
In a briefing note for MPs investigating the issue, Slater & Gordon said among the tactics used by lenders were insisting on sending responses only by post, demanding ID documents for each client and failing to provide records.
“While historic misconduct around discretionary commission arrangements is now widely recognised, we are seeing ongoing and systemic obstruction by lenders in the way they handle consumer complaints and legal claims.”
S&G said many lenders “insist on sending complaint responses only by post, even when we request email communication”, and the law firm had received over 23,000 postal responses since August this year.
“This approach makes it extremely difficult to efficiently track, manage, and respond to complaints, and does not serve the best interests of our mutual clients.
“By refusing to use electronic communication, lenders are not acting in good faith to resolve complaints swiftly or transparently.”
Sorting, scanning, and processing large volumes of letters added “weeks of administrative burden” and delayed complaint handling by up to six weeks per case.
Normal practice across financial services was to provide complaint responses by email or secure digital means, in a way consistent with Financial Conduct Authority (FCA) requirements for clear and accessible communication.
S&G said some lenders were rejecting letters of authority (LOAs) more than six months old by the time the complaint was made, even if they were valid and properly executed.
There were “many legitimate reasons” why an LOA may be more than six months old.
“If a claim is identified more than six months after sign-up, due to evolving industry systems or new information, this should not invalidate the original authority. Nonetheless, lenders continue to reject these LOAs, causing unnecessary delays.”
Normal practice was to accept any valid LOA, unless expressly revoked by the client, and there was no “legal or regulatory requirement” for a LOA to be dated within six months.
Contacting clients again for new LOAs added “three to four weeks on average” to the process, and “significantly longer” where clients were vulnerable or difficult to reach.
S&G said some lenders were also demanding ID documents for each claimant, “despite our clear authorisation to act”.
The law firm did not “routinely hold this documentation for our clients” and had offered letters of undertaking as an alternative, rejected by some lenders.
Normal practice was to rely on the authority of the client’s representative and only request ID “where there is a genuine fraud risk”.
The demand for ID documents created delays of up to eight weeks, and in some cases prevented “legitimate claims from progressing at all”.
Another tactic used by lenders was to send complaint outcomes only via secure portals, with “multiple log-ins” to access different client files and short expiry windows for access links. This created “unnecessary urgency” and an administrative burden.
Normal practice would be to send complaint responses by email or secure digital means that were accessible and manageable.
Lenders often stated that they could not provide records because they had been deleted for GDPR or retention reasons. S&G said normal practice was to retain key credit records “for at least six years, and longer where loans extend beyond this period”.
Many lenders continued to cite GDPR “as a blanket excuse, without offering transparency or alternatives”.
S&G said some lenders wrote directly to its clients, even when the law firm held a valid LOA.
“These communications are not copied to us as the authorised representative, despite our clear role in managing the complaint process. This creates confusion for clients and undermines the representative relationship.”
Bypassing the representative disregarded the client’s choice and introduced unnecessary risk.
S&G recommended to MPs that lenders should be mandated to accept email or digital communication, that LOAs should be valid unless revoked, there should be a ban on disproportionate ID demands, stronger record-keeping and the rights of representatives to client correspondence should be “enforced”.
Lizzy Comley, chief operating officer at S&G, commented: “The lenders created this problem by misleading their customers. This redress scheme has been proposed by the FCA following a ruling by the Supreme Court.
“Yet a significant number of them are still doing everything they can to frustrate and delay compensation for the customers they misled, as our dossier shows.
“Now, despite all of that, these same firms are being asked to run the compensation process while publicly complaining that the scheme is too generous to consumers.”
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