Banks in the UK are set to be charges an extra £400m in fees by the Financial Ombudsman service (FOS) for dealing with PPI complaints. The FOS charges a standard fee of £550,00 per complaint regardless of whether the complaint is upheld against the financial insitution or not.

In April 2012 a supplemental fee was also introduced for PPI complaints to help deal with the addittional costs associated with PPI complaints, given the sharp increse in complaints being recieved which currently averages at around 1500,00 per day.

Banks to pay £400m in fees to ombudsman over PPI complaints

The four major UK banking groups – Barclays, HSBC, Lloyds and RBS – are anticipated to pay over £370 million in fees to the FOS for PPI complaints received since 2011. While data is not available for complaints received against individual banks from 2009, the industry as a whole is also expected to have incurred charges of around £92 million for PPI handling between 2009 and 2011.

Over 190,000 PPI complaints were received by the FOS against the four biggest financial institutions in the first six months of this year. Consumers have the option of complaining through the FOS once they have contacted their bank directly.

“After eight weeks, if they have not heard anything back from the bank then we can look at the complaint,” says a spokesperson for the FOS. “Or else, if they have heard back from the bank and have had a final decision on their complaint but they’re not happy with that, then they can bring their complaint to us.”

An average of 65% of PPI complaints received by the FOS in the year to March 31, 2013 were upheld. Barclays Bank and Lloyds TSB Bank are among institutions above this industry average. 74% of PPI complaints received against Barclays Bank and 90% against Lloyds TSB Bank from January 1 to June 30, 2013 were upheld, for example.

A spokesperson for the British Bankers’ Association, an industry lobbying group, says a backlog at the FOS means uphold figures will continue to remain high.

“These numbers are quite high now and probably will continue to be high for a little while, but will start to fall. You’re basically looking at cases that are up to two years old,” he says.

When asked why banks are rejecting thousands of complaints that are actually found by the FOS to be in the favour of the consumer, a spokesperson for Lloyds said: “We are seeing that the ombudsman now agrees with more of our decisions in PPI cases than they have done previously.” (The rate of overturns for Lloyds’ subsidiary, Lloyds TSB Bank, hit 90% in the first half of 2013; in 2012 it was 98% in the first half and 86% in the second half of the year.)

He continued: “The reason for the overturn on the vast majority of these cases is because the bank, rather than the ombudsman, has instigated the change in decision following a further review of the case.”

A spokesperson for Barclays says: “Regarding FOS cases our overturn rate has reduced significantly to below the industry average.”

RBS, meanwhile, says: “We are now working hard to compensate customers who were mis-sold these products in the past. We started writing to customers in September 2012 and will continue throughout 2013.”

HSBC declined to comment.

Financial institutions have so far paid out £11.5 billion in compensation to customers who have complained about the way they were sold PPI, with this figure only expected to rise.


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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

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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.