Record numbers complain about payment insurance
Record numbers of customers are claiming they have been missold personal payment protection (PPI), the discredited insurance taken out to guarantee instalments for mortgages, loans and credit cards.
The number of PPI cases taken on by the Financial Ombudsman Service (FOS) surged by 50 per cent from 1,499 in January to a new high of 2,238 last month, making it the most complained about area of personal finance.
The FOS, which released the figure yesterday, expects the number of complaints to rise sharply in coming months once customers have failed to obtain a satisfying solution from their insurer, which they must do before submitting a complaint to the dispute resolution service.
Campaigners have been urging people to reclaim PPI as a result of rampant misselling in the past, which the Financial Services Authority has sought to stamp out with fines of up to £1m on 12 financial institutions, including HSBC's HFC Bank. Although PPI can be a sensible precaution for people worried about losing their job or falling ill, campaigners estimate that as many as half of the 20 million policies currently in force, £10bn worth, may have been missold by salespeople, many working on a commission basis.
First, potential borrowers were often told – wrongly – that they would not be able to take out loans unless they also took out a PPI policy. Secondly, many policy-holders could never have claimed because they were self-employed or had a pre-existing medical problem.
Generally, PPI pays back to consumers only 20 per cent of premiums, far less than other forms of insurance. Home insurance pays back about half of its income, car insurance returns about 80 per cent.
The campaign opens a second front in the mass revolt against overcharging by financial institutions, which has been championed by The Independent. Hundreds of thousands of bank and building society customers have claimed back up to £30,000 for current account penalty fees for bouncing a cheque or going over an overdraft limit.
However, almost all claims have been put on hold pending the result of a High Court test case on the legality of the charges, brought by the Office of Fair Trading against seven high street banks and the Nationwide Building Society. A ruling from the judge, Mr Justice Andrew Smith, is not expected until next month.
When the ruling is made, the banks or the OFT are likely to become bogged down in further legal wrangling, which could postpone settlement of existing claims for months or even years.
The OFT estimates that current account providers make between £2bn and £3.5bn a year from penalty charges, much less than the £5bn collected by the PPI industry, suggesting that the PPI revolt could dwarf the bank charge campaign.
Websites which.co.uk and moneysavingexpert.com are urging people to check whether they have the policies and complain – if appropriate – using forms published on their sites.
Doug Taylor, the personal finance campaigner at Which?, said: "Which? has identified in the past a series of misselling problems with PPI and we welcome the fact that many customers are taking action to recover misselling. However, this is the tip of the iceberg and we are anticipating that the campaignwill increase and more and more cases will go forward in the future."
- 1 Half of young women unable to ‘locate vagina’ and 65% find it difficult to say the word
- 2 Emma Watson on Jennifer Lawrence naked photo leak: 'Even worse than seeing women's privacy violated is reading the comments'
- 3 Saudis risk new Muslim division with proposal to move Mohamed’s tomb
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ashya King: 'Cruel NHS has not given us the treatment we need', says father of five-year-old with brain tumour who fled to Spain
iJobs Money & Business
£35000 - £38000 per annum + benefits: Ashdown Group: Executive Assistant/Event...
£30000 - £32000 per annum: Ashdown Group: HR Generalist (standalone) - Tunbrid...
£600 - £800 per day: Harrington Starr: Derivatives Risk Commodities Business A...
£600 - £800 per day: Harrington Starr: Power & Gas Business Analyst/Subject Ma...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony