The FSA has agreed to temporary arrangements for Barclays, Lloyds Banking Group and RBS to handle Payment Protection Insurance (PPI) complaints.

The arrangements extend the time periods the firms have to deal with their backlog of stayed PPI complaints and the high volume of new complaints on PPI.

The regulator says the arrangements have been put in place to ensure that the firms are able to handle the PPI complaints properly.

Under FSA rules PPI complaints have to be responded to within eight weeks. The extension agrees a timeframe for the firms to deal with the claims that have been put on hold and also agrees additional time for the firms to deal with PPI complaints received since the end of their involvement in the judicial review.

PPI complaints still with the firm but put on hold during the judicial review will receive a decision by the end of August. Complaints received after the conclusion of judicial review but on or before the 31 August will be responded to within 16 weeks and complaints received on or after 1 September and before 31 December 2011 will be responded to within 12 weeks.

The FSA claims that “strict”” conditions have been imposed on the temporary time extensions. The firms with the temporary time extension will have to keep PPI complainants and their customers fully informed and provide the FSA with regular reports on compliance.