Banks taking longer to settle PPI claims
Banks are finally improving the speed at which they settle claims over mis-sold payment protection insurance (PPI) – but are dragging their feet when it comes to paying up, experts claim.
There has been a boom in complaints against banks since the High Court ruled they must compensate customers who had been mis-sold PPI policies in April this year.
And while banks – which were overwhelmed by the number of complaints – have finally started to cut the time it takes for complaints to be settled, the delay between a settlement being agreed and customers receiving their compensation is growing.
Michael Pilgrim, of PPI specialist, Randall and Vickers, said: “It is clearly good news that the banks are finally beginning to deal with these cases less slowly than before.
“But to leave customers, who have been ripped off once and had their cases settled, waiting for longer and longer before receiving their cheques just rubs salt into the wounds.
“There’s no excuse for this process to start taking longer. If the cases are settled, the banks have set aside funds to compensate them so the cheques should just be paid.”
Many banks and credit card providers had effectively put all PPI complaints on hold pending the decision of the High Court as to whether or not customers should be able to claim compensation for cases where policies were mis-sold dating back years.
When the court ruled in customers’ favour in April, thousands more people lodged complaints, overwhelming banks trying to deal with the backlog of existing claims.
While many expected the spike in complaints after the High Court ruling to be short-lived, the number of claims still being made six months later has taken some banks by surprise.
Use the Myfinances.co.uk comparison tables to find the best deal on all types of insurance.
The Financial Services Authority originally ordered six major banks to settle any claims received before the High Court ruling in April by August 31, 2011.
It set out further rules for how long other cases should take. All cases received before the end of August have to be dealt with within 16 weeks; those received between September 1 and New Year must be dealt with in 12 weeks; while any received after January 1, 2012, must be settled within eight weeks of being received.
Mr Pilgrim said: “The fact that banks are dealing with cases more quickly than in the past is a good first step, but there’s still a long way to go before cases are being dealt with inside eight weeks.
“Furthermore, there is no target for how quickly customers should be paid their compensation. This is what ultimately matters to people and, given that they are victims of mis-selling already, the FSA should step in to make sure the banks aren’t withholding money unnecessarily.”
Sign up to the Myfinances.co.uk newsletter to receive the latest financial news direct to your inbox.
Follow Myfinances.co.uk on Twitter: @news_myfinances
Comments
Newsletter sign up