More and more people are worried about payment protection insurance and this is evident from the fact that banks are receiving close to 12,000 complaints on a daily basis. This is a conclusion that can be drawn from information relating to July to December 2011. During this period, the number of complaints relating to loan insurance rose by 21% as compared to the first half. 85% of all complaints received were relating to payment protection insurance. People complaining to the Financial Services Authority about savings and current accounts no longer constitute a significant percentage of the total complaints.
The extent of misselling of payment protection insurance is evident from the fact that banks had to pay out £2.1bn to customers as compensation for missold policies in the second half of 2011. This meant that a policy that was very popular amongst borrowers no longer enjoyed their support. People preferred PPI policies because it helped them take care of repayments even when they lost their jobs or fell ill. However, misselling complicated the process and banks ended up paying billions of pounds as compensation to customers. The number of cases and claims being filed has compelled the Financial Services Authority to extend the original deadline of eight weeks for settlement of claims.
Consumer Groups- Misselling Widespread
Richard Lloyd, chief executive of consumer group Which?, said that the large number of complaints relating to PPI misselling is a clear indication of how common this problem was. He called upon the FSA to take strict action against institutions that were trying to slow the process of settlement of claims. Considering the fact that Barclays received more than 250,000 in the first half of 2011 and more than 280,000 claims in the second half, fears that customers may end up waiting for a long time for their money are genuine. Lloyds Banking Group has received the largest number of complaints amongst banking groups while Barclays has received the largest number of complaints per brand.