Wednesday, February 13, 2008
The financial ombudsman has seen an explosion of complaints about payment protection insurance and has called for banks and other firms to compensate wronged customers sooner.
The Financial Ombudsman Service says it received 1,499 complaints about payment protection insurance (PPI) in January alone. This compares with 1,832 for the whole of the 2006/07 financial year.
What's more, the Ombudsman reported that 80% of the PPI complaints it received from customers were being upheld. This compares with 32% for insurance complaints overall, 32% for buildings insurance, 43% for motor insurance and 34% for travel insurance.
PPI is supposed to cover repayments on loans, mortgages and credit cards when the holder is unable to fund them because of accident, sickness or unemployment.
It has been criticised for being overpriced and difficult, sometimes impossible, to claim on. The Competition Commission is conducting an investigation into the market after the Office of Fair Trading decided there may be evidence of detriment to consumers.
Separately, the Financial Services Authority has been tightening the guidelines that sellers of PPI must follow and has fined several firms for pushing PPI onto customers who do not want or need it.
This is Money has been at the front of the campaign to overhaul the PPI market and has produced template letters to help customer claim their money back. The high proportion of complaints being upheld by the Financial Ombudsman Service suggests companies are too often ignoring valid complaints of mis-selling.
Emma Parker, a spokeswoman for the Financial Ombudsman Service, said: 'There was a record number of complaints about PPI in January and the number is increasing month-on-month. The fact that so many are being upheld suggests that firms aren't doing enough to deal with these complaints before they come to us.
'It bares comparison with the early days of endowment policy complaints, where firms were simply turning complaints down and leaving it to the Ombudsman to deal with. We will talk with trade bodies and firms to ensure they follow our guidance on processing these claims and deal with more of them before they get to us.'
Brian Capon, head of media relations for the British Banker's Association, said: 'Banks' customer relations departments are well-staffed with people who are experienced in looking at a situation with particular regard for the customer's point of view. All claims are considered carefully, but as in the case of any complaint, the customer is entitled to ask the Financial Ombudsman Service to look at their case if they are unhappy with the bank's decision. In some cases the customer might approach the Ombudsman direct before giving their bank the opportunity to look at it first.'
Posted by Directory Insurance at 4:23 PM