PPI complaint levels at all-time high as consumer discontent continues, says Financial Ombudsman Service
The number of payment protection insurance (PPI) complaints received by the Financial Ombudsman Service in the 12 months to June 2014 reached an all-time high, as consumer animosity and wariness towards financial product providers continues to characterise the opening years of this decade.
The latest round of figures from the Ombudsman illustrated that whilst the total number of new PPI cases had actually fallen in the 6 months to June this year compared to the latter half of 2013 that nevertheless the year from June 2013 to June 2014 represented the highest number of complaints registered in a 12 month period since records begun.
And whilst the quantity of newly emerging PPI cases fell from 193,054 to 133,819 in the opening half of this year, the reality is that PPI is still comprising a staggering 70% of all complaints the Ombudsman is dealing with at present, highlighting the lack of resolution still marring the relationship between consumers and financial product administrators.
Compensation levels ëunprecedentedí
The topic of controversy and scandal for a number of years now, PPI was thrust into the spotlight after it emerged that a plethora of the nationís leading banks and building societies had been guilty of ëmis-sellingí the insurance to their customers on top of their credit card and loan acquisitions during the opening years of the millennium, unaware that they would be paying for the cover on top of the premiums for these products.
The level of mis-selling continued to soar as the 00ís decade progressed, and an estimated 20 million policies were said to exist in the UK by 2008, with an additional 7 million being taken out by consumers thereafter.
Financial authorities identified that the driving factor behind the huge number of PPI mis-sales was the fact that the policies were not underwritten at the sales stage, and as such a multitude of people taking out other financial products ended up taking cover completely aware that they were doing so. This inhibited them from being able to make decision about whether the insurance was even worthwhile for their circumstances, and in some cases led to people paying hundreds of pounds a year on a cover that they werenít even eligible.
And whilst regulatory organisations, and the Financial Conduct Authority (FCA) in particular, have imposed heavy fines on certain bankís who were found to be guilty of mis-selling PPI on a mass scale, the problem continues to blight the relationship between consumers and financial parties who would have thought that the country would have resolved the scandal by this point.
PPI uphold rates between January and June this year – which describe the number of complaints which the Ombudsman ruled in favour of the consumer ñ was identified to be 64%, illustrating the scale of malfeasance conducted by banks during the opening decade of the 00ís. Thus far, organisations in the financial services industry have already compensated their consumers for a monumental £16 million in PPI repayments, over just a three year period, according to the FCA. Martin Wheatley, chief executive officer, at the FCA, said: “Making sure anybody previously mis-sold PPI is treated fairly now, and paid redress where its due, is an important step in rebuilding trust in financial institutions. In around two and a half million complaints this was not necessarily the case so, at our request, firms will be looking at these complaints again. “The process is now working well; in just over three years £16bn has been put back into the pocket of the consumer ñ that is unprecedented. Given the enormity of this exercise it is no surprise that there have been some issues along the way but our approach is delivering a good result for consumers.”
ëBank…doesnít understand or really careí
Chief Ombudsman, Caroline Wayman, says: “Responsibility for sorting out the mass mis-sale of PPI is still the major part of the Ombudsman’s workload. But during the first half of 2014 there’s been a marked change in the type of complaints consumers are asking us to resolve ñ as underlying attitudes become more entrenched and the issues involved get more complex. “We’re seeing more and more people turn to us in frustration where they feel their bank or insurer simply doesn’t understand or really care. And we’re hearing growing dissatisfaction from people about being processed industrially as a number rather than being listened to as an individual customer. “By giving their customers more thoughtful, considerate and personal responses ñ clearly setting out the reasoning behind an individual decision ñ we know that businesses can help sort out problems earlier on, prevent complaints being escalated to the Ombudsman and rebuild trust and confidence more generally. “The Ombudsmanís recent disclosure comes as the FCA confirmed that a monumental 2.5 million old cases of PPI mis-sale would be re-opened by the regulator, after two parties in the financial service industry agreed to allow the watchdog to embark on further examination of whether they were guilty of unfairly rejecting precious claims. Lloyds Banking Group, who have currently paid out the highest amount of all providers to compensate PPI claims, has confirmed that they will be revisiting nearly half a million complaints as part of the re-investigation, estimating a resolution date of sometime next year.
For complaints about financial products other than PPI, the total number of cases referred to the Ombudsman was 3% higher than the second half of 2013 at 57,310 complaints compared to 55,747. This figure includes banking complaints ñ the number of which received has increased by 7% compared to the second half of 2013 ñ and insurance complaints, which have risen by 1% since then second half of last year. The average uphold rate for all cases over the first six months of the year was 57%, up from 51% during the previous six months. As a result of the large number of complaints it is receiving, the Ombudsman says it will take between 18 and 24 months to resolve cases taken on.