PPI fiasco dominates complaints data
Releasing its quarterly data for the April-June period, 69% of complaints received were to do with PPI - an average of 900 per day.
Tony Boorman, principal ombudsman and decisions director at the FOS, says the figures come as no surprise: "The period also saw both the High Court decision on the PPI judicial review and the decision by the British Bankers' Association not to appeal that decision."
During the period, the high number of cases hampered the FOS workload, he says, resulting in it being unable to resolve as many complaints as hoped.
The rate of new PPI cases has since lessened but Boorman doesn't expect the level to change dramatically any time soon: "Banks and others are already reporting record numbers of new complaints and it will be some time before we see the impact of those on our figures.
"So it's difficult to tell whether we will be seeing still higher numbers yet - or whether the figures will now start to decline," he says.
Boorman also reveals that the next FOS complaints report will separate PPI data by individual businesses.
Credit card accounts made up the next highest number of complaints, accounting for 7% of the total. This is a slight increase compared to previous figures.
The report also revealed a decline in current account complaints and an increase in mortgage-related complaints.
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.
The practice of a dishonest salesperson misrepresenting or misleading an investor about the characteristics of a product or service. For example, selling a person with no dependants a whole-of-life policy. There have been notable mis-selling scandals in the past, including endowment policies tied to mortgages, employees persuaded to leave final salary pensions in favour of money purchase pensions (which paid large commissions to salespeople) and payment protection insurance. There is no legal definition of mis-selling; rather the Financial Services Authority (FSA) issues clarifying guidelines and hopes companies comply with them.
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.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
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.