09/04/2011 by admin.

Since October 2010 some members of the British Bankers Association (BBA) have refused to deal with any new claims for missold Payment Protection Insurance (PPI).  Those at the forefront of this are Barclays, HSBC, Lloyds and BoS who have now all reported they will put all new PPI complaints on hold until the outcome of the Judicial Review is published.  The stand-off between the BBA and the Financial Ombudsman Service (FOS) has led to more and more PPI complaints now being sent to the FOS. This is because the FOS has declared that putting PPI claims on hold is not fair and once the consumer receives a letter from their bank confirming their claim is on hold, this is a trigger for them to send it direct to the FOS.  The FOS is now reportedly receiving between 8,000 and 10,000 new PPI complaints each week, and there is no end in sight. As the PPI debacle continues, one thing became clear was the FOS is fast running out of money to deal with all these new PPI claims. Some suggest at a rate of £1M a month.  

Of course, if the FOS runs out of money, we have an unparalleled situation where the banks sit on one side, the consumer on the other and nobody to adjudicate on the middle. As it is the sheer volume of PPI complaints being received by the FOS means they are taking up to 30 days to acknowledge receipt of a new claim and anything from 4-6 months for PPI claims to be reviewed. A situation that can only favour the banks !To refill the fighting fund, the Financial Services Authority (FSA) will issue a compulsory levy to raise £25 million to build up the reserves of the FOS. The FSA has confirmed that it will raise £25 million for the FOS through a compulsory levy in June after consulting on the proposal in February.

The regulator has moved to bolster the reserves of the FOS over concerns that the Ombudsman could run out of cash in as little as 6 weeks as banks facing more and more PPI complaints refuse to pay case handling fees until the issue is resolved. The FOS released a statement confirming just how serious the current situation surrounding PPI claims really is. A spokeman said “we need to increase our financial reserves by £25 million, as a contingency against the costs of growing volatility of which the latest example is the range of issues around cases involving payment protection insurance”.The FOS said the £25 million will only be used to insulate it from volatility of its income and cost and would not be used to tackle routine issues. The FSA has not concluded how the £25 million levy will be divided between financial advisers, banks and insurers.

Amongst all this the FOS has still confirmed that PPI complaints should still be made as normal. Anyone who has been sold PPI in the last 6 years should check their finance agreement and PPI policy. PPI claims should still be sent to the bank in the fist instance. If they do not deal with your PPI complaint properly within the statutory 8 week perdiod or put your PPI claim on hold, you can still send your claim to the FOS.

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23/01/2011 by admin.

This week sees the banks begin their High Court challenge over new rules on the way complaint about Payment Protection Insurance  (PPI) must be handled.

The British Bankers’ Association (BBA) is launching a Judicial Review against the Financial Services Authority and the Financial Ombudsman Service over new regulations that came into force in December.

The rules aim to ensure consumers are treated fairly, both when they buy payment protection insurance (PPI) and when they complain about being mis-sold the cover.To ensure people understand what they are buying, providers will have to talk potential customers through the key features of a policy, rather than just provide them with a document giving the information, as was previously the case.

They will also have to provide evidence to show that it was made clear to the customer that the cover was optional if it was taken out alongside credit.But the banks are unhappy that the rules will apply to ppi claims relating to PPI policies which were sold before the new regime was brought in.

The BBA said: “We believe the FSA is effectively creating a precedent which permits it to apply new rules to previous sales - even where those sales were regulated by other FSA rules.”It said the policy was like having a road with a speed limit of 30mph, which was later changed to 20mph, and deciding to hand out speeding tickets to people who drove at 30mph before the limit was reduced.

PPI covers debt repayments if the holder is unable to work due to an accident or illness or if they lose their job, but it has come in for heavy criticism after research found it had been mis-sold to many consumers who would never be able to claim on it while others felt pressurised into taking it out alongside a loan or credit card.

The cover is currently the single most complained about product to the Financial Ombudsman Service, with the group receiving nearly 2,600 ppi claims during the past week alone. It is also finding in favour of consumers in 86% of PPI cases, suggesting the banks are not handling the complaints properly.

Source: The Press Association

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02/12/2010 by admin.

Over the last 5 years the misselling of Payment Protection Insurance (PPI) has become a thorn in the side of both the consumer, banks and the industry regulator.  

With over 2 million PPI policies in existence and PPI claims at an all time high, it’s no wonder the banks are unwilling to open the floodgates to consumer complaints. Instead they have found another reason to stop processing complaints full stop ! 

Since the regulator proposed all previously rejected PPI claims should be revisited (some 200,000) , the British Banking Association (BBA) has now requested a Judicial Review to investigate the validity of this regulation, and given its members the ideal opening to put all other valid claims on hold. 

Is this fair to the consumer? Absolutely not. What will be crucial is to see how the regulator will handle the impending Judicial Review on PPI claims to be held sometime in January 2011. It’s no secret the Financial Services Authority (FSA) has been reported as being somewhat toothless in the past. This alongside the new coalition Governments hint that it may reduce the powers of the FSA and put them back with the Bank of England makes the Judicial Review all the more interesting. 

Will the FSA use this as a showdown as Margaret Thatcher did with the unions and go out in a blaze of glory, or will it roll-over one more time and let the banks dictate their own consumer complaint policies? 

Only time will tell, but in the meantime don’t expect too much positive news from your banks PPI complaints department.  

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