As consumer complaints hit a record high, PPI still dominates

The Financial Ombudsman Service (FOS) received a record number of complaints last year, with almost four fifths of the total amount relating solely to Payment Protection Insurance (PPI).

The FOS is an independent service that handles disputes between lenders and individuals when a decision cannot be made. They commented that a record total of 2.3m inquiries, which is the equivalent of 40,000 a week, in the 2013 tax year.

Chief Ombudsman, Tony Boorman said it had been ‘an unprecedented 12 months’ Adding “People are simply looking for honest, straightforward answers that show someone has listened and helped make sense of things.” A record 518,778 disputes were settled by the FOS over the year, more than double the number resolved in the year previous, it said in its annual review.

The mis-selling of PPI has been named as the UK’s worst consumer scandal and continues to dominate the work of the FOS. Complaints about the policies made up 78% of the total, a rise of 6% compared with the previous year. The policies for Payment Protection Insurance were intended to protect the borrower should they become unable to make the repayments. However, they were widely mis-sold to millions of customers who had taken out a loan, mortgage, credit card or other credit agreement.

Banks have made provisions of just under £20 billion to cover compensation and redress to customers whom they wrongly mis-sold, this amount is almost seven times higher than the total which was originally estimated by regulators. Of this amount, £9.8bn has been made in payouts by Lloyds Bank alone.

However, the figures suggest that the scandal is levelling off; the 6% rise came after a 140% leap the previous year. At the peak last year, the Ombudsman was receiving 12,000 new complaints a week solely regarding Payment Protection Insurance, in recent months, this has halved to about 6,000 a week.

The Ombudsman expects complaints to keep falling in the coming year, but has warned that resolving disputes will take time. Of the 1m complaints it has received, two thirds were made in the last 18 months, which has resulted in a back log of claims that will take some time to complete.

To cope with this, the service have hired a further 1,000 staff in 2013-14, following a similar recruitment drive the previous year. Even with this additional help, they have been left with a ‘stock’ of 400,000 PPI complaints at the end of this financial year.

Across the board, disputes were resolved in favour of the customer in 58% of cases. Four of Britain’s big banks, Lloyds, Barclays, HSBC and Royal Bank of Scotland accounted for 63% of complaints received.

Payment Protection Insurance is still very much an issue and even though claims are becoming fewer, you should still consider making a claim for mis-sold PPI on any credit agreement that you have had. You can do this with the help of a professional claims company such as Claims Advisory Group on 0800 088 4668 who are able to complete your claim on your behalf on a no win no fee basis*.

Posted on Wed 21 May 2014