As the Financial Ombudsman Service publishes its figures for the first half of the year, it is clear that the PPI scandal is far from over.
The report by the Financial Ombudsman Service (FOS), shows that 86% of all new complaints made to the service in the first half of this year were about mis-sold PPI (payment protection insurance), revealing a record high of 266,228 claims in this period.
The FOS exists to help customers who have a complaint about a bank or other financial services provider. They are the next port of call for the customer if an agreement cannot be reached by contacting the provider.
PPI is insurance designed to cover the repayments on a loan if you suddenly become unable to work, and can be beneficial for some people. However, many were sold PPI without their knowledge or when they didn’t need it, and an entire industry has sprung up around managing the thousands of claims coming in.
According to the consumer group Which?, banks have set aside more than £18.6 billion to settle claims. However a 26% increase in claims made to the FOS in the first half of this year indicates that banks are not always paying out when they should. The British Bankers’ Association, the banks’ trade body, has called for a deadline for PPI claims, but the FOS say that banks are deliberately delaying compensating customers. Natalie Ceeney, chief ombudsman, said:
“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,"
"But, more positively, we are seeing encouraging signs from some major businesses that are starting to recognise the value of getting things right for their customers - with an increased focus on sorting out problems and concerns as quickly as possible.”
The FCA (financial conduct authority), who regulate the financial sector, have indicated that they are keen to bring banks and lenders under control regarding PPI claims, and intend to carry out a review of procedures. In a speech to the Building Societies Association, Linda Woodall - director of the FCA’s mortgage and consumer lending subdivision - said:
“The amount of complaints that go to the ombudsman suggests that something isn’t working in the way in which firms manage and investigate customers’ complaints.”