Consumer complaints over the mis-selling of payment protection insurance (PPI) topped out at 4.23 million complaints in 2012, according to data released by the Financial Conduct Authority (FCA). However, the number of complaints against mis-selling did drop in the second half of 2012 to about 2.1 million complaints. More than 2.2 million complaints were registered in the first half of 2012. The overall sum showed that PPI complaints increased by 5 percent over 2011.
PPI Claims : Q2
PPI complaints represented 63 percent of all complaints directed toward insurance companies and banks, the FCA reported. Complaints against other financial instruments dropped across the board. The FCA released these numbers:
* Complaints against credit cards fell by 14 percent.
* Savings account complaints dropped 20 percent.
* Current account complaints fell 6 percent.
Barclays won the dubious prize of being the bank that registered the most complaints by consumers. Consumers piled on Lloyds Banking Group, too, with 762,000 complaints, which covered all manner of financial products. Both banks have been buried in scandalous headlines over the past year.
This avalanche of complaints has resulted in interesting maneuvers by banks to shine up their images.
For example, Barclays has embraced a report from Rothschild to scrub up its image and add some sparkle. Barclays paid for a report from Rothschild that hammered the bank for its “winning at all costs” philosophy that embraced profit over customer service. The damning report inferred that the investment bankers at Barclays thought themselves above normal rules and that led them down the path of greed where they lost all sense of proportionality, the report said.
The writers at the which4u.co.uk blog suggest that the bank is engaged in self-flagellation in an effort to separate its slick, new self-image from its bad, old image and beg for mercy all at the same time.
It should be remembered that Barclays soiled its image pretty good back in January when a senior executive at Barclays Wealth, Andrew Tinney, tried to destroy a report from Genesis Ventures, a consulting firm.
That report slammed Barclays Wealth as a money-grubbing operation that pursued profit “at all costs.” The report painted Barclays Wealth as a den of hostility and intimidation that crushed all internal dissent.
To prove the report true, Tinney promptly shredded the analysis by Genesis and denied its existence to the bosses at Barclays.
The new chief executive at Barclays, Anthony Jenkins, was tipped off by whistleblowers and launched an investigation named “Project Helium.” After Jenkins uncovered the report, he read the riot act to Barclays’ 140,000 staff and told them they would get the boot if they didn’t embrace new rules that will uphold the bank’s values.
“My message to those people is simple: Barclays is not the place for you,” Jenkins said. “The rules have changed. You won’t feel comfortable at Barclays and, to be frank, we won’t feel comfortable with you as colleagues,” he added.
In his efforts to introduce accountability and integrity, Jenkins will need to decide if he will reduce the investment bank bonus pool to pay for the fines the bank will draw for its role in the Libor rate-rigging scandal.
As if the PPI scandal isn’t enough of a mess, the Ministry of Justice has now stepped in to turn the screws on claims management companies. A new rule will go into effect this summer that will bar companies from charging significant up-front fees to represent clients in claims against financial firms. The measure is mostly aimed at firms involved in PPI mis-selling claims.
These claims firms are involved in making random phone calls and texting to mis-selling victims. Some are charging that these claims companies are signing up clients without a written agreement and then charging them up-front fees to pursue a claim.
The new rules will force these companies to get signatures on contracts before charging clients fees for assistance. The ministry moved against claims companies last year and stripped 260 firms of their licences for cold-calling potential clients without their permission.
About 3,000 companies are licensed to go after claims. Some charge as much as 30 percent of compensation awarded. Mis-selling of PPI policies is a lucrative affair for claims companies. UK banks have already paid out £15 billion in compensation. Consumers should be aware that they can file claims themselves at no cost.
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