Two million PPI policies offer no protection

28 May 2008

The number of mortgage and banking disputes more than tripled in the last 12 months while insurance complaints have doubled, official figures reveal today.

In the last year, a record 794,648 people contacted the Financial Ombudsman Service (FOS), 123,089 of whom made complaints, a 30% annual increase.

Although grievances about mortgage endowments fell by 70%, banking and insurance disputes surged. Complaints about bank charges – which are still subject to a legal dispute – increased 10-fold while gripes relating to current account providers increased eight-fold.

Complaints relating to controversial Payment Protection Insurance (PPI) were also up, with the majority of people concerned they had been mis-sold policies.

The figures come as consumer watchdog Which? issues a new warning about PPI. It claims that a third of consumers who have taken out this controversial type of insurance policy in the past five years may never be able to make a claim - meaning their policies are useless.

It estimates that as many as two million PPI policies – sold alongside loans, credit cards and mortgages – have been sold to people who were not eligible for cover.

This might be because they are self-employed or on a fixed-term job contract, aged 65 and over, or have pre-existing medical conditions.

However, Doug Taylor, personal finance campaigner at Which?, says people who think they have been mis-sold PPI should try and fight back. “We've always known that people were being mis-sold PPI, but we were still amazed to discover the scale of it,” he adds.

“If you have a loan and think you might have been mis-sold PPI, now's the time to fight back. Compensation could be just a letter away.”

The rise in financial complaints could be a result of the credit crunch and general dismal financial climate.

Sir Christopher Kelly, chairman of the FOS, says: “This timelast year we had hoped we were starting to see a downward trend incomplaint numbers for the first time. But instead, events during theyear have led to the ombudsman service receiving record numbers of newcases."

Read our guide to reclaiming your PPI premiums and download a template letter.

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