Complaints About PPI Soar

Complaints about payment protection insurance are shooting up, says the Financial Ombudsman Service, and it has called on banks and other firms using the insurance to compensate customers.

In January 2008 the number of complaints was 1,499, whereas for the whole of 2006-7 financial year the number of complaints was 1,832.

Also, interestingly, 80% of the complaints about PPI were being upheld. This is way above the level of 32% for complaints about insurance as a whole, 43% for motor insurance, 34% for travel insurance.

The idea of PPI is to cover repayments on loans, mortgages and credit cards if the holder is unable to cover the costs because of accident, sickness or unemployment. It has come under criticism for being overpriced and difficult to claim on.

The Competition Commission is investigating after the Office of Fair Trading decided there may be evidence of detriment to consumers. In addition to that, but in a separate action, the Financial Services Authority has tightened the guidelines for sellers of PPI to follow and has fined several firms for selling  PPI to customers who do not want or need it.

Spokeswoman for the Financial Ombudsman Service, Emma Parker, 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.”

Head of media relations for the British Banker’s Association, Brian Capon, 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.”

It would seem that as 80% of cases are being upheld companies are still not treating customers fairly, before and after PPI is sold to them.