PPI complaints soar

PPI complaints soar

Complaints to the Financial Ombudsman Service (FOS) from consumers who were mis-sold payment protection insurance (PPI), increased by 57 per cent to 30,301 between October and December 2010, compared with the previous three months.

PPI complaints now make up 54% of the FOS’s workload.

The FOS, which only deals with PPI complaints that financial firms have failed to resolve, ruled in favour of the customer in 68 per cent of the cases it dealt with in the final three months of 2011.

This is a significant fall from between July and September 2011, when it ruled in favour of the customer in 92 per cent of cases.

Millions of PPI policies were routinely sold with mortgages, loans and credit cards from the 1990s.

The insurance is designed to meet credit payments if the policy holder is unable to pay due to illness or unemployment, but millions of people were sold policies that were invalid because they did not fulfil the qualifying criteria.

Some policies were sold to people who did not need them and many people did not realise that the insurance was optional.

For years the banking industry refused to admit that PPI had been mis-sold, but was forced in May 2011 to adhere to the Financial Services Authority’s (FSA’s) demand that past sales of the policies should be reviewed.

The FSA also said that future sales of PPI should be much more strictly regulated.

Earlier this month the FOS said it was disappointed at the number of customers still waiting for financial companies to deal with their PPI complaints.

It is considering introducing a fee of £350 for dealing with PPI cases, which firms would have to pay in addition to a £500 standard case fee.

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