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PPI scandal pushes complaints to financial ombudsman up 54%

Two thirds of the 149,925 complaints received by the Financial Ombudsman Service in the first half of 2011 were about payment protection insurance.

 

by Victoria Bischoff on Sep 06, 2011 at 12:21

The scandal over payment protection insurance (PPI) saw the number of complaints received by the Financial Ombudsman Service (FOS) soar 54% to just under 150,000 in the first half of the year, new data reveals.

This compares to a total of 97,237 cases received in the second half of 2010.

According to the ombudsman two thirds – 98,632 – of the 149,925 new complaints it received between 1 January and 30 June 2011 were about loan cover. This follows the high profile court case over the handling of PPI complaints.

Five financial businesses – Lloyds (LLOY.L), Barclays (BARC.L), HSBC (HSBA.L), Royal Bank of Scotland (RBS.L)) and credit card provider MBNA – accounted for just under half of all the new cases referred to the ombudsman during the six-month period, each generating a total of more than 10,000 complaints each.

Earlier this year Lloyds revealed it had put aside £3.2 billion to cover PPI claims, Barclays £1 billion, Santander £731 million and RBS £850 million.

Lloyds, the UK’s biggest bank, topped the complaints table, with more than 19,569 new cases, followed by Barclays with 16,864 and Lloyds’ main subsidiary Halifax/Bank of Scotland with 13,021.

MBNA was hot on their heels with a total of 12,500 complaints, up from just 3,430 in the second half of last year. At 87% the number of complaints about the US credit card company upheld by the ombudsman was also far higher than most other financial companies.

Santander was the only major bank to see a slight fall in the total number of complaints reported to the ombudsman, down from 6,759 to 6,434 – though it saw the largest number of general banking complaints.

According to the ombudsman the average success rate for consumers was 47%, down from 53% in the second half of last year. This decrease reflects the impact of the legal challenge between the banks (with the exception of Santander) and the financial regulator earlier this year.

Natalie Ceeney, chief executive and chief ombudsman, said: ‘These latest figures show a significant increase in the number of new PPI complaints referred to the ombudsman during the first half of 2011’.

‘This period coincided with the time when most of the high street banks and some other financial businesses had put PPI complaints on hold, because of their legal challenge against the ombudsman service and FSA,’ Ceeney explained. ‘As a result, complaints in this period about PPI were harder fought, and harder to resolve – particularly if we found in favour of a consumer. This data therefore gives only a partial view on the cases which we were working to resolve over this period,’ she added.

Last week Royal Bank of Scotland reported a 27% increase in the number of customer complaints it received in the first half of 2011 – with PPI accounting for a huge 47% of these. RBS-owned NatWest saw a 24% increase in complaints. Santander on the other hand – which is well known for its poor customer service – said its complaint levels had fallen by one third.

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