Complaints to the FSA up 21%
The Financial Services Authority (FSA) received more than two million complaints in the second half of 2011 - a rise of 21% from the first six months of the year.
In April 2011, banks were ordered to start working through a huge backlog of PPI cases by the FSA.
The insurance is taken out to cover repayments of loans should you fall ill or find yourself out of work. But many people were mis-sold this policy and so far £2.1 billion has been paid out in compensation.
Complaints about banks were down 13% annually and at their lowest levels since 2006 but those regarding credit cards and unregulated loans were up in the second half of the year.
Complaints upheld in favour of consumers were up 51% over the year and this was mainly in response to PPI.
"The increase in PPI complaints further demonstrates just how widespread PPI mis-selling was. We now need to see the banks take action and deal with these complaints quickly and efficiently and the FSA must take action against anyone dragging their feet settling complaints," says Richard Lloyd, executive director of Which?
"We need the new financial regulator, the Financial Conduct Authority, to be a watchdog not a lapdog. It must stand up for consumers and stand up to the banks," he adds.
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.