Two million PPI policies offer no protection
The number of mortgage and banking disputes more than tripled in the last 12 months while insurance complaints have doubled, official figures reveal today.
In the last year, a record 794,648 people contacted the Financial Ombudsman Service (FOS), 123,089 of whom made complaints, a 30% annual increase.
Although grievances about mortgage endowments fell by 70%, banking and insurance disputes surged. Complaints about bank charges – which are still subject to a legal dispute – increased 10-fold while gripes relating to current account providers increased eight-fold.
Complaints relating to controversial Payment Protection Insurance (PPI) were also up, with the majority of people concerned they had been mis-sold policies.
The figures come as consumer watchdog Which? issues a new warning about PPI. It claims that a third of consumers who have taken out this controversial type of insurance policy in the past five years may never be able to make a claim - meaning their policies are useless.
It estimates that as many as two million PPI policies – sold alongside loans, credit cards and mortgages – have been sold to people who were not eligible for cover.
This might be because they are self-employed or on a fixed-term job contract, aged 65 and over, or have pre-existing medical conditions.
However, Doug Taylor, personal finance campaigner at Which?, says people who think they have been mis-sold PPI should try and fight back. “We've always known that people were being mis-sold PPI, but we were still amazed to discover the scale of it,” he adds.
“If you have a loan and think you might have been mis-sold PPI, now's the time to fight back. Compensation could be just a letter away.”
The rise in financial complaints could be a result of the credit crunch and general dismal financial climate.
Sir Christopher Kelly, chairman of the FOS, says: “This time
last year we had hoped we were starting to see a downward trend in
complaint numbers for the first time. But instead, events during the
year have led to the ombudsman service receiving record numbers of new
Payment protection insurance is designed to cover you should you fall ill, have an accident or lose your job and can’t make repayments on loans or credit cards. However, research by consumer watchdogs found the cover to be overpriced, filled with exclusions (policies exclude self-employment, contract employees and pre-existing medical conditions) and were often mis-sold because the exclusions were never fully explained. In May 2011, the High Court ruled banks had knowingly mis-sold PPI and ordered them to compensate around two million consumers.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.