Payment protection insurance complaints still rising
- 10 February 2011
- From the section Business
Complaints about payment protection insurance (PPI) have increased further and now make up half the workload of the Financial Ombudsman Service (FOS).
The FOS received 24,955 PPI complaints in the last three months of 2010.
That was 50% of the total number of complaints the FOS had received and nearly twice the number lodged with it six months earlier.
PPI is supposed to help people repay loans if they fall ill, have an accident or lose their job.
Widespread criticism of the mis-selling of PPI, campaigns by consumer groups and restrictions by regulators have, in the past two years, led to a sharp increase in the number of people complaining that they have been mis-sold the insurance.
The FOS, along with the Financial Services Authority (FSA), is waiting for the outcome of a judicial review heard in the High Court in January.
The British Bankers' Association (BBA) has challenged their authority to impose new rules on the handling of PPI complaints.
The rules would force the banks to reopen nearly three million past complaints, possibly costing them £2.7bn in extra compensation.
For the whole of the financial year 2009-10 the FOS received just over 49,000 PPI complaints, which amounted to 30% of the total complaints it handled that year.
The public's appetite for lodging such complaints shows no sign of diminishing.
So far, in the first nine months of 2010-11, the FOS has received just under 60,000 PPI complaints, more than in the whole of the previous financial year.
The Ombudsman service had previously complained that the UK's banks appeared to have a policy of fobbing off PPI complainants in the hope that they would simply go away.
In 2009-10 it upheld 89% of the PPI complaints that came its way.
Since then, however, the apparent success rate for PPI complaints has been falling steadily, with just two-thirds upheld in the last quarter of 2010.
However, the FOS said this did not mean that the banks were improving their ability to deal with the complaints properly in the first place.
A FOS spokesman explained that some banks were now choosing to appeal against an initial ruling against them.
This, he said, was artificially depressing the success rate of complainants as their cases awaited a final adjudication at the second stage of the Ombudsman's procedure.