The payment protection insurance (PPI) scandal continues to make up most of the consumer complaints against financial services companies according to Financial Services Authority (FSA) figures.
Data released every six months by the FSA shows that PPI complaints accounted for 2.2 million of 2.5 million general insurance complaints. The figure constitutes a 129 per cent rise in PPI complaints compared to the previous six months.
Following PPI-related cases, banking complaints lead the way with 828,040, a 5 per cent increase compared to the previous six months and a 3 per cent rise annually. However, if one excludes PPI-related complaints against banks, the industry actually saw a drop in complaint numbers.
The PPI policies protect customers who are unable to continue repayments on credit cards or loans dues to illness or other specific circumstances. Financial institutions, however, often sold the product without providing sufficient information to customers. In some cases, clients were not even aware they had purchased the insurance cover. Other instances involved coercion by the company.
Lloyds and Barclays top list
The largest number of PPI claims complaints involved Lloyds (LLOY.L) and Barclays (BARC.L). The FSA review found that Lloyds TSB received 431,708 over six months. Most of these, 391,272 in total, were in the general insurance and protection category that includes PPI complaints. Lloyds also received 37,403 banking-related complaints.
Barclays received 442,266 complaints of which 280,358 were general insurance and pure protection-related. Additionally, the bank received 152,372 banking complaints and 4,853 home finance-related complaints.
The Royal Bank of Scotland (RBS.L) was third in the number of complaints with 362,869 over six months. Of the total, 291,872 complaints related to insurance and pure protection, 56,368 to banking and 10,938 to home finance.
Again, most of the complaints for these three large banks were PPI-related.
In addition to banks, there was also a 27 per cent rise in complaints against financial advisers. Complaints against personal investment firms rose from 27,525 to 34,886 over the first six months of the year. The personal investment firm category includes independent advisers.
Complaints over investment bonds fell by 7 per cent to 10,126 compared to the previous six months while complaints about “other investment products or funds” rose by 23 per cent to 7,208 from 5,838. Structured product complaints jumped by 34 per cent continuing a trend as the category experienced a 40 per cent rise in the previous review.
A PPI claim “every seven seconds”
The FSA data shows that a new claim comes in at the rate of approximately one every seven seconds. Total compensation for general insurance and pure protection products between January and June of this year was £2,990 million.
Major banks have set aside more than £9billion in anticipation of future PPI compensation payments.
The PPI scandal resulted in the appearance of PPI claims management firms, derisively known as “ambulance chasers,” that have caused cases to skyrocket. The claims management companies often offer to represent clients on a “no win, no fee” basis with a typical charge of 25 per cent of the compensation award if the claim is successful.
The companies are advertising on TV and using other marketing techniques to convince people into making their own PPI claims. However, in many cases, the claimants can easily handle these cases on their own without any help from a claims management firm.
Complaints involved administration and customer service
Overwhelmingly, the PPI and other complaints dealt with customer service and general administration issues. Other reasons included policy terms and sums and charges.
Overall, banks and building societies accounted for 2.5 million of the 3.5 million complaints received across all financial services sectors. In particular, banks have faced massive numbers of PPI-related claims accounting for about 60 per cent of all complaints. A Santander spokesperson said that many of the complaints received by the bank were not valid, so the large increase was not as serious at it would seem.
FSA looking into redress for rate swap victims
Interest rate swap mis-selling may have involved thousands of customers and FSA reviewers are conducting initial investigations into the UK’s largest financial institutions. The review involves 50 cases and that may expand significantly to cover claims that could involve compensation in the billions of pounds.
All major British banks and seven smaller companies have agreed to the FSA’s redress scheme slated to conclude by April 2013. The FSA reviewers will study the initial findings and if they see any legitimate wrongdoing, they will approve full-scale compensation.
The Federation of Small Businesses (FSB) is not happy about the FSA’s moves and the organization wrote George Osborne asking the government to terminate the scheme and launch a new independent review of the complaints. FSB chair John Walker said that he found “serious failings” in the FSA plan and that it would be better to start with a new compensation scheme.
Walker believes that an independent scheme is more inclined toward “natural justice” and that it will cost less and be just as fast as the FSA plan. However, FSA retail banking department head Julia Dunn argued that the regulator’s solution was sound and that it covered all the concerns that have troubled the FSB and small companies.
Dunn said that the Financial Services Authority had “worked incredibly hard” in addressing the situation quickly and thoroughly.
Interest Rate Swaps Resource
Small Business Disillusioned with mis-sold Interest Rate Swaps
Many businesses have become disillusioned due to the compensation schemes set aside for the interest rate swap mis-selling derivatives. The Financial Services Authority has agreed to look into the cases of the mis-sold financial products of the big four banks (Barclays, Royal Bank of Scotland, Lloyds, and HSBC). There are several other banking institutions that have become involved in this Swap claims dilemma, also.
£10m Interest Rate mis-selling complaint against Lloyds by Alan Sugar
Lord Alan Sugar has sent a formal letter of complaint to Lloyds Bank for “mis-selling” of an Interest Rate hedging product. The apparent Break free sum amounts to £10m which was attached to the interest rate hedging product Lord Sugar used on his property.
The derivative was to protect against interest rate rises on a £97m Lloyds loan. Lord Sugar is undersatood to be considering legal action if the complaint is unsuccessful
Interest Rate SWAP Claims
Maple Leaf Financial have a specialist team of solicitors dedicated to dealing with the mis-selling of interest rate swap protection products by the banks. We are happy to review these relatively complex swap arrangements and to claim compensation for our clients where appropriate.
If you believe you have incorrectly been classified as a ‘sophisticated’ customer and have, therefore, not been eligible for interest rate swap redress. Maple Leaf Financial will review your interest rate product and we will be happy to discuss your individual concerns and requirements
Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim
Latest posts by Tim Capper (see all)
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- FCA updates PPI redress for 2.5 million old PPI complaints - October 27, 2014