Having dealt with 1.25 million complaints so far, and still receiving an average of 4,000 a week, from customers who have been mis-sold Payment Protection Insurance by credit card companies and banks; chief Financial Ombudsman Caroline Wayman has announced that it will be years before we see the end of the PPI scandal that has been a hot topic since the late 90s.
Over the last twenty or so years, a staggering number of customers were mis-sold insurance policies on their loans or mortgages, protecting them in case they fell ill or lost their jobs. The problem is that most of these people neither needed nor wanted these policies, and many were paying for them without knowledge or legitimate consent.
The scandal reached its peak in 2012 when, on average, 12,000 complaints a week were being received. To date the Financial Ombudsman Service (FOS) has received 1.25 million complaints, and that doesnít even include complaints made directly to the offending banks and credit card providers. The FOS was sitting on 400,000 outstanding complaints as of April last year, and hopes to reduce that number to under 280,000 by this coming March (2015). The current average of 4,000 complaints a week will hopefully drop to 3,000 over the next 12 months, say the FOS.
An estimated 55% of these complaints have been upheld in the customerís favour in the last few months and to date banks alone are believed to have set aside in excess of £24 billion to customers who have been sold inappropriate PPI packages. Lloyds Bank has put out the most, setting aside £11.3bn to deal with admin charges and compensation related to mis-sold PPI.
So the trend is a positive one; the number of complaints has dropped by two thirds, and a significant amount of money has been returned to customers, but the sheer scale of the problem is such that offending banks and credit card companies will be paying out for years to come before the whole issue is resolved. As Caroline Wayman said, “Although numbers are slowly declining, it will be years before we can truly say this mis-selling scandal is over,” while emphasising tentatively optimistically that the number of complaints coming in is genuinely stabilising.
Since the outset of the scandal the FOS has doubled its staff, now numbering 4,000, and expects to add a further 200 members in order to cope with the scale of the problem. However, it has also been announced that it will reduce its annual cost to the industry by about £30 million, meaning that it will have to dip into its own cash reserves in order to function at full capacity this year.
As well as issues with mis-sold PPI, the FOS is also still receiving vast numbers of complaints about customers who have been inappropriately sold packaged bank accounts with expensive hidden extras, as well as complaints related to the ongoing problem with extortionate payday loans. On the latter, the FOS has said that it is working with the Financial Conduct Authority to speed up the process of compensation, saying that ì[they] recognise that the current regulatory process ñ where we can only ëofficiallyí step in once a business has had eight weeks to resolve the complaint ñ does not seem appropriate where the products involved can be taken out in a matter of minutesî.
For advice on how you can claim back your PPI, visit owlclaims.co.uk