Banks and insurers failing victims of PPI mis-selling
The Financial Ombudsman Service (FOS) has criticised banks and insurance companies for their slow response to payment protection insurance (PPI) compensation claims.
The huge numbers of PPI claims are overwhelming UK banks, with the result that customers are becoming tired of waiting and are taking their cases to the FOS.
The FOS says that number of PPI cases on its books has doubled to 130,000 in the financial year 2012/13, from 60,000 in 2010/11 and this type of case now makes up half of its workload.
Consumers were routinely sold PPI alongside credit cards and loans and were told the policies would cover their repayments in the event of sickness or unemployment.
However many people, including pensioners and the self-employed, were sold policies that were useless to them because they did not meet the qualifying criteria.
Following a High Court ruling in May 2011, more than three million people were eligible for compensation, with the total costs expected to reach up to £9m.
To help it cope with its inflated workload, the FOS wants firms with more than 25 cases of PPI mis-selling made against them to pay an additional fee of £350 fee for each case.
However, it has promised to waive fee for firms with 25 complaints or less.
Tony Boorman, principal ombudsman, said: “It’s disappointing that there’s little finality for significant numbers of consumers who are still waiting for their bank or insurer to deal with their complaint.
“When consumers and businesses alike are tightening their belts and facing uncertainties this is not welcome news for anyone.”
In the first 10 months of 2010 more than £1 billion was paid out in compensation to customers who were mis-sold PPI.
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