Tuesday, March 05, 2013

Ombudsman Swamped By PPI Claims

Unsurprisingly, the PPI mis-selling scandal (one of the many scandals that have destroyed the reputation of the UK's financial services industry) continues to hit the headlines.

The financial ombudsman service (FOS) reports that it is taking on 2,000 new cases a day, with numbers rising at "unprecedented" rates.

The BBC reports that the FOS received 211,885 new PPI complaints in the second half of 2012. These accounted for nearly 75% of the 283,251 new complaints sent to the ombudsman during the six months.

The average that a successful claimant receives in compensation is around £3K, representing a gross cost to UK banks of £15BN.

Lloyds TSB Bank had the highest number of PPI cases referred to the ombudsman of any institution during the second half of the year, but the ombudsman found in the customers' favour in 86% of the cases against the bank.

Needless to say, as the number of referrals to the FOS rises, so does the length of time it takes for the ombudsman to make a determination. It seems that the delays are also increasing because some companies are causing unnecessary delays.

Natalie Ceeney, chief financial ombudsman, is quoted by the BBC:
"As the complaint levels show no sign of slowing, consumers are increasingly having to wait longer to get their complaints sorted - with many businesses still continuing to cause unnecessary delays.
Where businesses have shown a real commitment to better customer service and diligent complaints handling - including actively engaging with the ombudsman - cases are resolved more quickly and easily, to the benefit of everyone."
None of this is surprising, those who were sold PPI will see this as an opportunity to try to obtain a refund (irrespective of whether they were mis-sold PPI or not) and the banks will do everything they can to try to reduce the costs of the claims.

That being said, had the banks not incentivised their staff to sell policies that were in many cases clearly inappropriate to people who didn't need them/couldn't claim on them when they needed to, then this entire mess could have been avoided.

The greed of the banks is now being repaid by the perspective that the banks' customers have that there is "free" money to be made.

As the old saying goes, "what goes around, comes around".

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