The Financial Ombudsman Service (FOS) has criticised banks for taking too long to agree and make compensation payments to customers who were missold payment protection insurance (PPI).
The FOS has now received more than 400,000 complaints and is still receiving 1,500 new complaints about PPI every day.
PPI is the biggest financial misspelling scandal of recent years. It concerns the sale of insurance to cover policy holders to cover loan or credit card payments should the individual become ill or be made redundant. In many cases the cover was not suitable for the individual sold the policy and was invalid.
The FOS says that despite assurances from banks that they would settle cases promptly, thousands of claimants are still waiting for compensation or for their cases to be assessed. The FOS said it is disappointed that banks are not doing more to try and resolve cases themselves.
The FOS is currently finding favour with consumers in seven out of ten cases, lower than a year ago when eight out of ten claims against banks were upheld. The number of calls each day to the FOS over the issue is increasing and now averages 2,500 a day.
It said that an increasing number of claims were being received via claims management companies and that the FOS’s guidance on making complaints was not always being followed which leads to delays for customers and “unnecessary additional work” for the FOS. The FOS said the proportion of claims coming in from claims management companies had fallen from 76 per cent a year ago to just 69 per cent.
The FOS said that most cases had been upheld in favour of the consumer and that just a fraction of cases involved the FOS, valued at £200 million as banks had paid out £3 billion to claimants this year alone.
Many leading high-street banks including the Royal Bank of Scotland (RBS), Barclays and HSBC had increased the amount they had set aside for PPI compensation in their latest financial results released in July. In total, banks have earmarked around £8 billion to cover the PPI misspelling scandal.
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