Warning over PPI dispute delays

Pound coinsA record number of disputes regarding the mis-selling of payment protection insurance (PPI) will need to be resolved over the next year, as banks and insurers have subjected customers to "delays and inconvenience", a finance watchdog has warned.

Despite a legal challenge to PPI complaints being dropped last year, the Financial Ombudsman Service (FOS) said it was "disappointing" that a significant number of consumers are still waiting for businesses to clear up their cases.
The ombudsman expects to settle 130,000 PPI cases in the financial year 2012/13 and warned that many of these disputes are likely to be "more entrenched".

This figure is up from 109,500 this financial year and more than double the 60,000 PPI cases resolved in 2010/11.

The FOS said it will need to gear up on an "unprecedented" scale to tackle complaints, with PPI cases expected to make up half of its workload.

It is consulting on plans on how to cope, including proposing businesses pay an additional fee of £350 for PPI cases on top of the £500 standard case fee, saying it would not be fair for those not involved in mass PPI claims to cover the costs.

Tony Boorman, principal ombudsman, said: "A year after the High Court ruling gave us legal finality on the approach that financial businesses should take on PPI complaints, 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."

Consumers took out PPI to help repay their loans if they fell ill for a long period or became unemployed, but a widespread mis-selling scandal emerged.

The British Bankers' Association confirmed in May 2011 that it was not going to appeal against a High Court ruling that rules relating to the mis-selling of PPI could be applied retrospectively.
© 2012 Press Association
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