PPI complaints continue to soar, but borrowers urged to avoid claims firms
In the year to 31 March 2016, it received 188,712 PPI complaints in total, which equates to 56% of all new complaints made to the Ombudsman over that time frame.
However, despite 66% of PPI complaints being upheld in favour of consumers, a whopping 81.5% were made by claims management companies.
- Use Moneywise’s free PPI reclaim template letter to claim yourself.
Meanwhile, package bank account complaints – where you pay a fee for a current account usually bundled with add-on insurance products – also rose, more than doubling to 44,244.
Here, 61.5% of complaints were bought by claims management companies, although only 14% of complaints were upheld in favour of the consumer.
Claims firms typically take about 25% of any redress you’re awarded, but you can claim yourself for free – something which the Ombudsman is encouraging.
Alex Neill, Which? director of policy and campaigns, adds: “Too many people have been driven to use claims management companies (CMCs) that are taking a large proportion of the compensation they are owed.
“Banks and other providers must make the process simpler and easier for customers to claim directly, or pick up the tab when consumers use CMCs to get back the money they are owed.”
Overall complaints on the up
In the year to 31 March 2016, 1.6 million people got in touch with the Ombudsman – that’s over 5,000 each working day – to discuss financial problems, from pet insurance to portfolio management.
One in five complaints – a total of 340,899 – went on to become investigations. This compares to 329,509 the previous year.
Of the 438,802 complaints the Ombudsman resolved over this time period, just over half (51%) were upheld in the consumer’s favour.
However, other than PPI and packaged bank accounts, 82% of complaints were made by consumers rather than by claims firms.
The Ombudsman highlights that complaints involving credit, such as hire purchase and point of loan sales, increased by 40%, with payday loan complaints tripling.
Meanwhile, new complaints about personal pension plans are up by almost a quarter (23%), although annuity complaints are stable.
Can I complain to the Ombudsman?
If you’ve got a gripe with a financial firm, you need to complain to it first. If you don’t get a response within eight weeks, or you’re unhappy with the response you’ve been given, you can take your gripe to the free Financial Ombudsman Service.
See www.financial-ombudsman.org.uk for the full details on how to submit a complaint.
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.
Claims management companies
Regulated by the Claims Management Services Regulator since 2006, claims management companies offer advice and legal services in respect of claims for compensation, restitution, repayment for loss, damage or negligence. To many, the term is merely a polite euphemism for “no win, no fee” law companies. If you feel they offer services you need, approach with care.
In exchange for any lump sum – usually your pension fund – an annuity is “bought” from an insurance company and provides an income for life. When you die, the income stops. Annuity rates fluctuate daily and depend on your sex (although from 21 December 2012 insurers will no longer be able to use gender as a factor when calculating annuities), age, health and a number of other factors, so you have to pick the right one and, once bought, its terms cannot be altered, so seek financial advice.
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.