New PPI complaints to ombudsman surge
Published: 2nd Aug 2011 11:13:00
A courtroom defeat for banks over the mis-selling of payment protection (PPI) insurance resulted in a surge of new complaints, figures show.
The Financial Ombudsman Service has reported receiving an average of 900 PPI cases each working day in April, May and June.
In April, the banking industry lost its High Court challenge to new rules on the sale of PPI.
A month later, the British Bankers' Association chose not to appeal.
This ended the hold on tens of thousands of fresh PPI complaints that came in to banks and the process of compensation for those mis-sold PPI moved up a gear.
"During the period of that judicial review, our ability to progress cases against many banks and other financial businesses was seriously hampered, meaning that fewer cases than we had planned were resolved," said principal ombudsman Tony Boorman.
PPI is supposed to cover loan repayments if someone becomes ill or jobless, but many of the policies sold by the banks were mis-sold.
Figures released by the ombudsman show that there were 56,025 new complaints about PPI in the first quarter of the financial year.
This accounted for 69% of all new complaints made to the ombudsman during that period. Some 55% was resolved in favour of the consumer.
Banks have now set aside millions of pounds for compensation, and are attempting to clear a backlog of complaints.
Lloyds Banking Group set aside £3.2bn to cover the cost of this compensation, followed by Barclays (£1bn), RBS (£850m), Santander (£548m) and HSBC (£269m).
"It is difficult to tell whether we will be seeing still higher numbers [of complaints] yet, or whether the figures will now start to decline," Mr Boorman said.
Next on the list was 5,500 disputes about credit card accounts, which made up just 7% of new complaints.
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Harvard CitationBBC News, 2011. New PPI complaints to ombudsman surge [Online] (Updated 2nd Aug 2011)
Available at: http://www.ukwirednews.com/news/174674/New-PPI-complaints-to-ombudsman-surge [Accessed 23rd Jul 2014]
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