UK banks and insurers are mis-selling payment protection insurance (PPI) resulting in millions of dollars used to compensate victims – but it’s about to get a lot more expensive.
The Financial Ombudsman Service (FOS) today announced it’s plan to increase the £500 fee for institutions who mis-sell PPI by £350 per case. The fee will only be applicable to companies with more than 25 complaints.
The proposal has been made to combat the “mass complaints” the FOS has received from customers sold the wrong PPI. These complaints and the compensation which follows has cost the banking sector around £1 billion.
The charge increase will see the main mis-sellers of PPI, which include Royal Bank of Scotland and Lloyd’s Banking Group, face fee’s of up to £58 million next year, if complaints remain the same.
Tony Boorman, chief Ombudsman at the FOS, said, “It’s disappointing that there’s little finality for significant numbers of consumers who are still waiting for their bank or insurer to deal with their complaint.
“The delays and inconvenience that this causes consumers means the ombudsman now has to gear up for unprecedented demand and volatility in our workload. Our proposals to make sure we have the operational capacity to handle record volumes of cases involve those businesses who account for these complaints contributing the most to sorting out the problems. But in these difficult economic times … this is not welcome news for anyone.”
