Complaints about banks soar

| August 31, 2012 | 0 Comments
Complaints about banks soar

The total number of customer complaints about UK banks has soared, but many of the complaints relate to payment protection insurance (PPI) mis-selling.

When PPI-related complaints are stripped out, many banks received fewer complaints in the first half of this year.

Part state-owned banks Lloyds and RBS received 146 per cent and 128 per cent more complaints respectively in the first half, while complaints at Barclays were up 76 per cent and HSBC experienced a 73 per cent increase. compared with the 2011 first half.

However, excluding PPI-related issues, complaints about Lloyds fell by 18 per cent and Barclays experienced a drop of 9 per cent, while complaints about RBS were up 36 per cent.

For years, PPI was routinely sold with loans and mortgages to cover repayments if customers fell ill or became unemployed.

Mis-selling occurred when policies were sold to people who were ineligible to claim at the time of sale or when aggressive sales tactics were used, such as implying that a loan application was more likely to be successful if PPI was taken out.

Up the end of June, UK banks had paid out £5.4 billion for PPI mis-selling, and the final total could be double this figure.

The scandal has led to the number of claims management firms soaring and many are using poor business practices, with a high number of bogus claims being made.

The government is introducing changes next year which will allow people to go to the Legal Ombudsman with complaints about claims management firms, rather than of Ministry of Justice’s Claims Management Regulation Unit.

The Ombudsman will be able to award compensation to consumers if this is appropriate.

The chief Legal Ombudsman, Adam Sampson, said: “This is great news for the public and consumers as we have significant powers of redress to help protect them.”

“We are confident we can support the claims management regulator to improve standards across the industry.”

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