Customers seeking refunds flooded a banking watchdog with complaints yesterday after serious failings were exposed in the £5bn-a-year industry in Payment Protection Insurance (PPI).
By mid-afternoon, about 400 PPI holders had contacted the Financial Ombudsman Service, more than double the daily average.
Personal finance experts say PPI is frequently unnecessary, limited and expensive. On Wednesday the Financial Services Authority fined a subsidiary of HSBC, HFC Bank, a record £1m for failing to monitor staff who sold the insurance to 163,000 sub-prime customers.
Following publicity, the number of inquiries to the ombudsman rose, rising still higher on the publication of our front page report yesterday.
Record numbers of customers are winning refunds of up to £10,000 each for PPI, having been mis-sold policies for mortgages, loans and credit cards.
The Financial Ombudsman Service has so far resolved 80 per cent of complaints in favour of customers. Many PPI customers were not asked their circumstances or made aware that they were taking out the policies, or had a medical condition that would have prevented a payout.
The FSA has fined 12 firms, including GE Capital and Capital One.