Huge Rise In Bank Complaints - Daily Telegraph

16/09/2009 by Bradders.

PRESS RELEASE - DAILY TELEGRAPH - SEPTEMBER 2009

Thousands of people who have been sold payment protection insurance (PPI) alongside a loan or credit card are almost guaranteed to get their premiums back if they pursue a complaint.

Figures published by the Financial Ombudsman Service indicate that the arbitrator rules in the customer’s favour in almost nine out of 10 complaints it receives about this controversial insurance product.  With some firms almost every complaint received is upheld in favour of the consumer – suggesting that banks and credit card companies are failing to deal with customer complaints effectively.

For example, 99pc of general insurance complaints made about Egg, Black Horse (the loan division of Lloyds TSB), MBNA Europe and FirstPlus Financial (part of Barclays Bank) were upheld in favour of the consumer. The figures were almost as bad for Capital One, Lloyds TSB and Northern Rock, where 98pc of the Ombudsman’s rulings on general insurance went in customers’ favour. Tesco Personal Finance and Co-operative Bank had 97pc of these complaints ruled against them, with Royal Bank of Scotland and Barclays notching up rates of 94pc and 93pc respectively. The vast majority of general insurance complaints concerned payment protection insurance.

According to the Ombudsman’s figures, 89pc of all ppi complaints are decided in customers’ favour. In contrast, 59pc of all complaints received are settled in customers’ favour. PPI, which was routinely sold by banks, loan companies and credit card companies, was designed to cover repayments in the event of the borrower losing their job or becoming too sick to work.

But most providers failed to explain that interest was often charged on the insurance premiums, and that the policies were often riddled with exclusions – meaning that those who were self-employed or worked on a contract or on a part-time basis would never be able to claim. Given the poor track record of many banks and credit card companies in dealing with PPI complaints, there are concerns that thousands of consumers are not getting the redress that is due. Nearly 1m people had complained to their bank or building society – a rise of almost a third since the start of the credit crunch. However, the FSA reported that banks   

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