PPI sparks new surge in Ombudsman complaints
The number of complaints received by the Financial Ombudsman Service rose by 39% between July and September this year to 143,177, boosted once again by complaints about payment protection insurance (PPI).
Over four fifths of the new complaints were about PPI (115,2467 complaints), while current accounts were the second most complained about product, attracting 3,705 complaints.
The Ombudsman has now received over one million PPI complaints, and is currently taking on between 8,000 and 10,000 new PPI cases each week. In the first six months of this financial year (Apr-Sep) it received 247,399 new PPI complaints − a 149% increase on the same period last year.
So far this year it has awarded compensation to consumers in seven out of 10 (70%) of cases it resolves. Between January 2011 and Aug 2013 - £12 billion has been paid out in compensation to consumers from the banks, according to the Financial Conduct Authority.
The Ombudsman also highlighted the fact it has attracted over 5,000 complaints about credit cards so far this year. It is currently finding in favour of the consumer in about a third of these cases.
In a statement, the Ombudsman said: "For many consumers, credit cards can be a useful way of managing their money. But things do go wrong with credit card accounts - and we often find that people come to us with familiar issues like disputed transactions, fees and charges, and problems with promotional offers."
It said it has seen more cases "over the last few years" involving consumers who have been struggling to make the minimum monthly payment on their credit cards.
The Ombudsman also said it has seen a slight rise in travel insurance complaints, as a result of more people taking holidays between July and September.
"A significant proportion of the complaints we see come from consumers who bought travel insurance online," the Ombudsman stated. "Often, we find that problems are caused by the details of the cover not being made clear to consumers before they took out the policy. However, in some cases we find that consumers bought their insurance without reading through the information about the policy."
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.
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.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.