PPI Worst Ever Finance Scandal?

The mis-selling of Payment Protection Insurance (PPI) could become Britain’s worst ever personal finance scandal.

The number of complaints about mis-sold PPI could eventually match the mis-selling scandals of the 1990s, including when banks had to pay out almost £8bn for wrongly transferring workers out of occupational pensions and £1bn for touting underperforming endowment policies.

The Financial Services Authority (FSA) has said it expects 2.75 million complaints about PPI to hit banks in the five years to 2015. Compensation to customers, as complaints are resolved, could potentially top £4 billion.

A record number of customers have already complained to banks about PPI this year, with almost 30,000 new cases taken to the Financial Ombudsman Service (FOS) between January and June, three times more than the combined totals for mortgages, investments and pensions.

Among the biggest providers of PPI, Barclays lost the highest proportion of cases taken to the FOS, with 61 per cent of complaints upheld in favour of the customer. Some smaller providers were found to be in the wrong almost all of the time. All complaints against Eisis, 99 per cent of those against Ocean Finance and 90 per cent of those against Black Horse were settled in favour of the public.

In total 81 per cent of the cases taken to the FOS were upheld in favour of the customer.

Mike O’Connor, chief executive of Consumer Focus believes it is clear banks are failing to deal with customers complaints properly. He said “Consumers want companies to take complaints seriously and put problems right first time. These results suggest that too many companies are not taking complaints seriously and are content to leave [consumers] to pursue problems with the Ombudsman instead”.