PPI payouts reach £215 million
"By releasing these figures we're providing a useful measure of firms' progress that can be tracked on an ongoing basis," says FSA spokesperson Margaret Cole.
The information released shows that the month of June was the busiest with £65 million worth of payouts made.
"While the amount of redress paid in May and June is unsurprisingly large in the wake of the judicial review, looking ahead we expect the amounts to vary somewhat as firms clear their backlogs while dealing with complaints as well," adds Cole.
In total, the Financial Ombudsman Service (FOS) has received more than a quarter of a million PPI cases, with a record 104,597 in the last financial year.
75% of claims paid out
It has upheld three out of four PPI complaints, explaining the huge sums financial firms now have to pay out. The average payout is £2,750.
Cole admits that the PPI mis-selling scandal has left "an indelible stain on the financial industry's record," but vows that the FSA, along with the FOS, will do everything in its power to ensure customers can claim redress.
The FSA extended the response period to PPI complaints from the standard eight weeks to 16 weeks because of the large number of cases.
From 1 September the complaints period will reduce to 12 weeks and this is expected to return to the standard eight-week timeframe in 2012.
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.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.
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.