The Financial Ombudsman Service (FOS) is gearing up for a rise in complaints about payment protection insurance (PPI) after banks put the processing of thousands of disputes on hold.

PPI Claims Spike

 

The ombudsman, which deals with disputes that cannot be resolved between financial business and customers, is planning to reallocate staff ahead of an expected spike in its PPI caseload, already at record levels.

The preparations come after the country’s biggest banks told customers that complaints affected by a legal challenge to new PPI regulatory measures would have to be put on hold.

The British Bankers’ Association (BBA), which launched the legal action last month, said the banks would finish handling the affected complaints once the outcome of a High Court action was known, likely next year.

However, consumers whose complaints are on ice are being advised that they can still take their cases to the Ombudsman – in spite of the banks’ legal action.

‘We are preparing for an increase in PPI complaints,’ said Emma Parker, a spokesperson for the ombudsman.

‘We have already seen a slight increase in calls from consumers following the judicial review. We are making sure we have got resources in place to deal with any rise in cases.’

The ombudsman, a free service for consumers, is not able to consider a case unless a firm has been given eight weeks to deal with or issue a final response. It has the power to make an adjudication even if the business involved in the dispute does not make representations.

Claims management companies suggested this week that the number of PPI claims held up during the legal action could be far greater than thought.

‘The banks are saying that only cases affected by the judicial review cannot be processed at this time but this is not what claims managers are seeing,’ said Anthony Sultan of the Claims Standards Council, the trade association for claims management companies.

‘I would say 95 per cent of claims being processed through members have been delayed.’

Barclays, Lloyds Banking Group,  MBNA, HSBC and HFC are the lenders putting claims on hold.

 

 

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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.