FOS sees rise in PPI complaints

The Financial Ombudsman Service (FOS) said it dealt with a total of 925,095 queries from consumers in the last financial year – a 46% increase on the previous financial year.

However, it said it resolved a record number of disputes (166,321) and in 50% of these cases, consumers were awarded compensation.

It did highlight, though, that the majority of its workload remains the controversial payment protection insurance (PPI) – accounting for 30% of new cases and a rise of 58% on the previous year.

Under a PPI policy, an agreed sum of money is paid out each month to fully cover, or cover a percentage of the payment due on your mortgage or loan if you are unable to work, as a result of becoming unemployed or sick.

However, the Competition Commission is pressing ahead with its proposal to ban the sale of PPI after it was found that millions of PPI policies were mis-sold.

In September 2009, City Watchdog the Financial Services Authority (FSA), proposed a major overhaul of the rules.

It was also established that financial providers commonly boosted their profits by incorporating the cost of a one-off PPI premium into a loan.

However, according to Chief Financial Ombudsman, Natalie Ceeney, many consumers did not realise that PPI was optional but the new rules now means providers will have to wait one week before they can contact customers to sell them the insurance.

Meanwhile, the FOS said current account queries made up 15.5% of new cases, 11% were about credit cards, 4.5% were about mortgages, and 4% were about unsecured loans.

Commenting on the figures, Natalie Ceeney said: “They [consumers] feel more empowered to ask questions, shop around, assert their rights, share information with others – and to complain when they are not happy. More people now expect a two-way conversation – not one-way communication.”

Discuss this in the Finance Markets forums

Story link: FOS sees rise in PPI complaints