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PPI insurance complaints may have peaked - ombudsman
July 29, 2013 / 5:12 PM / 4 years ago

PPI insurance complaints may have peaked - ombudsman

LONDON (Reuters) - The Financial Ombudsman Service is starting to see a decline in the number of complaints it receives about mis-sold loan insurance but levels remain very high, Chief Financial Ombudsman Natalie Ceeney said.

Britain’s biggest banks are expected to this week set aside hundreds of millions of pounds more to compensate customers mis-sold the insurance but Ceeney’s comments will raise their hopes that the worst is behind them.

The industry has already set aside more than 14 billion pounds to compensate customers mis-sold payment protection policies (PPI), which were meant to protect borrowers in the event of sickness or unemployment but were often sold to those who would have been ineligible to claim.

Ceeney said the ombudsman, which steps in where customers and their banks can’t reach an agreement, is now receiving 2,000 new cases every working day compared with 3,000 at its peak six months ago.

“I think somewhat inevitably the people who care most about complaining and trying to get compensation do so first. In any complaints cycle the numbers rise and you subsequently see them fall. I suspect we’re on the downward curve,” Ceeney told Reuters in an interview on Monday.

Ceeney cautioned it was difficult to predict future trends.

“Will it fall to 1,000 in six months? I just don’t know. The interesting thing about PPI is none of us know where it’s going to go,” she said.

Despite the ombudsman working with banks to improve their complaints handling procedures, Ceeney said 78 percent of cases were being resolved in the customer’s favour.

“We should be seeing uphold rates at 20 to 25 percent because banks should know what they’re doing now. These are now so well trodden. When customers do complain it should be handled properly,” she said.

Barclays is expected to add to the 2.6 billion pounds it has set aside for PPI costs, when it becomes the first UK bank to report results on Tuesday. Lloyds, which has set aside 6.8 billon pounds already, the most of any bank, is also expected to increase its provision on Thursday.

Lloyds ended a contract with Deloitte in June after problems were uncovered in the way a call centre operated by the business services firm handled customer complaints about PPI.

“Too many of the banks have not taken enough care on PPI complaint handling. Most of the big banks have outsourced it. The problem if you outsource is that you have to pay huge amounts of care to make sure your outsourcers are working to the right standards,” Ceeney said.

According to figures from Britain’s financial regulator, 50 million PPI policies were sold and only around 15 percent of people who had the policies have claimed for compensation.

Ceeney also said the ombudsman had seen a sharp rise in complaints about payday lenders although the numbers remained relatively low, which she blamed in part on the stigma felt by those who had used payday lenders.

Reporting by Matt Scuffham; Editing by Rhys Jones and David Evans

Our Standards:The Thomson Reuters Trust Principles.
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