After cheating millions of customers by mis-selling PPI policies, banks are trying to portray themselves as victims by accusing claims management companies of trying to over exaggerate the situation. 4% of all claims filed by banks and other institutions can be termed as unjustified and improper. Suddenly, banks are complaining that claims management companies are targeting them. The remaining 96% complaints have been conveniently ignored.
Banks mis-sold PPI policies by not bothering about eligibility of those who were paying their hard earned money for the same. They did not bother informing customers that such a policy had been added to the overall cost of the loan. Not surprisingly, banks have been compelled to set aside £9 billion towards compensation for victims of mis-sold PPI policies.
Rising awareness has resulted in more than 157,000 complaints relating to payment protection insurance being filed with the FOS. The total number of complaints received by FOS has also risen by 28%. It is not just about PPI alone. People are filing complaints relating to banking transactions, credit card transactions, mortgage deals, life insurance policies and pension policies as well.
There has been a significant increase across the board with the percentage of new complaints ranging from 26% to 35%. Close to 20,000 complaints were received regarding credit card transactions. Home insurance policies related transactions witnessed close to 1475 new complaints. The FOS is planning to increase its work force to ensure there are no delays in settlement of complaints. The FOS intends to improve its work force by 500 to avoid delays.
Richard Lloyd, Executive director of Which? has underlined the seriousness of the issue by questioning the ability of banks to settle disputes on their own. The fact that 250,000 people are approaching the FOS and about 1.2 million inquiries are being made is a clear indication that the internal dispute settlement mechanism of banks is not working properly.
This is a clear indication that banks are not adopting the right approach towards a settlement of this issue as a whole. The FOS is being put under pressure and may just not in a position to handle the workload.