The Competition and Markets Authority on Friday ordered RBS and Santander to appoint independent auditors after a probe found they had botched PPI communications to customers.
Banks must legally send out letters to customers who have PPI every year setting out how much they have paid and their right to cancel. RBS failed to do this for around 11,000 customers for up to six years, the CMA found, which meant many customers may not have been aware they even had PPI.
Santander also sent incorrect information to 3,400 mortgage PPI customers between 2012 and 2017.
The CMA’s Adam Land said it was “unacceptable” and the banks must “now play by the rules”.
“These are serious issues that, in the future, may result in fines if the Government gives us the powers we’ve asked for.”
The CMA said it expected RBS to repay affected customers and for RBS and Santander to make sure the breaches do not occur again.
RBS, which apologised, has paid £1.5 million in refunds to customers who didn’t receive a reminder.
Santander apologised and said no customers suffered financially.
The FCA has run a high-profile campaign featuring Arnold Schwarzenegger ahead of the deadline for PPI claims on August 29.