A massive 86% of all complaints made to the Financial Ombudsman Service (FOS), in the last six months, were regarding Payment Protection Insurance (PPI).
Banks, as well as the Ombudsman service, have been handling complaints for PPI mis-selling for a number of years now, but despite this the number of complaints is still at a record high.
The FOS handles cases where the complainant and the seller of the PPI product, cannot reach a satisfactory resolution to the case; over a quarter of a million complaints regarding PPI were made to the Ombudsman in the first half of 2013.
PPI mis-selling is the largest financial scandal of its kind in the UK, with banks paying out nearly £20 billion in compensation to victims.
PPI was designed to help meet monthly loan repayments if the borrower became ill or was made unemployed. However, many people were mis-old the policies, often because they did not need the cover or the terms and conditions meant they could never claim; other borrowers were paying for the insurance without even knowing they had it.
Thousands of people have already been compensated as a result of mis-sold PPI, but many more have yet to complain and could be due compensation if their complaint is upheld.
The British Bankers Association (BBA) has called for a deadline to when PPI claims can be made. But FOS has said some banks are taking too long to deal with claims, which led to an influx of complaints to the service.
Natalie Ceeney, the Chief Ombudsman, said: “During the first six months of this year we sorted out a record number of complaints for people making real progress in tackling the customer-service fallout from the mis-selling of PPI, widely accepted as the largest financial mis-selling scandal.”
“Disappointingly we are still seeing cases where businesses are not following our long-standing approach to PPI, resulting in long waits and unnecessary delays for consumers.”
Ceeney concluded: “But, more positively, we are seeing encouraging signs from some major businesses that are starting to recognize the value of getting things right for their customers – with an increased focus on sorting out problems and concerns as quickly as possible.”(Source: Financial Ombudsman Service)
Some banks better than others
Not all claims forwarded to the Financial Ombudsman are upheld, in fact there are wide differences between financial institutions.
The Ombudsman has revealed they upheld only 7% of complaints made from the Nationwide Building Society, whilst a massive 90% of customers who complained about Lloyds TSB were successful.
Martin Dodd, Lloyds Banking Group’s Customer Service Director, said: “The group continues to proactively manage the issue of PPI complaints in order that customers can receive redress if they have been mis-sold.”
He concluded: “This is an ongoing process and we will continue to review all claims in an in-depth manner that produces fair outcomes for customers.” (Source: BBC)
No need for claims management companies
The PPI mis-selling scandal has spawned a new industry of claims management companies, offering to help consumers with their complaint, in return for a cut of the compensation.
As well as sending annoying and often illegal text messages to potential victims, claims management companies can often charge up to 30% of the pay-out. Financial experts point out that using such companies can be an expensive way of completing a relatively simple job, which most people can do on their own.
Martin Lewis, a leading PPI campaigner, says on his website: “You can reclaim £1,000s on PPI yourself, easily, for free. Don’t hand 30% to a no-win, no-fee PPI claims handler. Everyone who’s got or had a loan, credit or store card, catalogue, overdraft or car finance should check now if they were flogged these policies.” (Source: Money Savings Expert)