Over 300,000 borrowers a year are being denied refunds equalling thousands of pounds for over-the-odds payment protection insurance (PPI) due to banks who are still automatically rejecting complaints.
Banks appear happy to ignore orders from the City watchdog, the Financial Services Authority (FSA), whom only ten months ago condemned lenders for refusing to compensate customers who were mis-sold PPI.
The FSA complained that too many people were forced to take their case to the independent Financial Ombudsman service to reach a fair decision.
The role of the Ombudsman is to settle disputes between consumers and banks. Currently, the Ombudsman still receives around 1,000 complaints a week around PPI and upholds about 90% of cases in favour of the consumer.
Emma Parker, Ombudsman spokesman, says: “Banks still need to improve the way they handle PPI complaints. We will continue to work with the regulator where we see banks treating customers unfairly”.
The average amount a consumer who complains to the Ombudsman receives is £3,000 from their lender, with some borrowers who have larger loans receiving up to £25,000. It is estimates however, that only 16% of people whose PPI complaint is rejected by a bank take their case onto the Ombudsman, hinting at the fact banks are successfully shrugging off an estimated 260,000 customers.
Consumer champion Which? spokesman Vera Cottrell, says: “Our biggest concern is that some of the most vulnerable consumers, who need money the most, will not take their case to the Ombudsman and not receive a refund”.
Which? are also concerned that too many consumers are persuaded to employ costly claims management companies to deal with complaints, in place of taking their case to the Ombudsman for free.
The IFOS have recently revealed record numbers of complaints against banks and insurers were made during 2009.
Absolutely a great blog/post. Very useful and an interesting read. Thanks.