PPI: Over 90% chance of complaint success

Wednesday, 16 September 2009 07:01

Complaints data released by the Financial Ombudsman Service (FOS) show high levels of payment protection insurance (PPI) complaints are found in favour of consumers.

The FOS now sees around 750 PPI complaint cases submitted each week - with 95 per cent covering mis-selling.

Some 27 per cent of all complaints now stem from PPI and 56 per cent of all insurance complaints.

And consumers taking their cases are finding high levels of success.

Some 99 per cent of insurance cases against Barclay's Firstplus, MBNA Europe, Lloyds' Black Horse, and Egg were found in favour of the consumer.

Ninety-eight per cent of complaints against Northern Rock, Lloyds TSB, and Capital One covering 'general insurance' which includes PPI resulted in victories for consumers.

Other major providers losing over 90 per cent of cases included Tesco, the Cooperative Bank, HFC Bank, Royal Bank of Scotland, Loans.co.uk and Barclays.

PPI was often sold alongside loans and credit cards - before moves were made by the Competition Commission to tighten rules on the sale of the insurance - to provide cover for borrowers if they are unable to repay loans.

However, high levels of PPI mis-selling where it was not explained the insurance was optional or where people who could not make claims because of existing medical conditions or being self-employed have led to thousands of people to reclaim premiums.

Claims should first be sent to the lender - which has eight weeks to deal with the complaint - before it is passed to the FOS.

Claims management firms have been blamed for increasing the levels of cases, taking a share of a payout, but people mis-sold PPI can make their own claims for free directly to the FOS.

The high levels of claims going to the ombudsman and the very high levels of claims being found in favour of borrowers suggest firms are not dealing fully with complaints.

A spokesperson for Egg - which was fined £721,000 by the FSA for PPI mis-selling last year - said: "We are reviewing the way we deal with PPI complaints and working with the Financial Ombudsman closely."

A Barclays spokesperson pointed out the FOS data included PPI within general insurance and not broken down. However, this would suggest wider problems over the handling of insurance complaints other than PPI.

"We realise things can sometimes go wrong, which is why we have dedicated teams in place to identify and fix problems as quickly and efficiently as possible," she said.

"We make sure our customers are aware of the Financial Ombudsman Service and encourage customers to contact the FOS if they want an independent view."

She added less than one per cent of Barclays' 22 million customers ever complain and in most cases the issue is dealt with without having to go to the ombudsman.

A Lloyds TSB spokesperson added the "vast majority" of its PPI customers were satisfied with the cover their policies.

"The increasing volume of unemployment claims we have seen from customers clearly demonstrates that PPI is a product of real value, offering peace of mind and protection for consumers if their circumstances change and they become unexpectedly sick or unemployed," she concluded.

Daniel Barnes

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