Banks face new surge in claims for PPI mis-selling
Complaints about missold payment protection insurance (PPI) to the Financial Ombudsman Service averaged 900 a day in the first quarter of the financial year. The Service had its busiest quarter with more than 81,000 complaints – more than double the number received during April to June 2010.
Tony Boorman, the principalombudsman, said: "It has been a bit of a roller-coaster." Some 69 per cent of all complaints – 56,025 – were about PPI, with more than half resolved in favour of consumers.
With banks having lost their High Court challenge to new PPI rules in April – the sector has thus been forced to put aside billions to compensate victims – the number of PPI cases taken to the Ombudsman should fall. Along with Barclays' £1bn PPI hit, the scandal has cost Lloyds Banking Group £3.2bn, RBS £850m, Santander £548m and HSBC £269m.
"The efforts by many banks to clear the backlog of cases that has built up should see record volumes of cases closed, and high uphold rates," said Mr Boorman. But he warned there would be continuing uncertainty until the second half of the financial year.
By then the banks will be dealing with cases they received after the judicial review. In those cases there is no dispute that banks should be following the Ombudsman'sapproach and the FSA's complaints-handling guidance.
"Banks and others are alreadyreporting record numbers of new complaints and it will be some time before we see the impact of those on our figures," said Mr Boorman. "So it's difficult to tell whether we will be seeing still higher numbers yet – or whether the figures will now start to decline."
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