Lloyds Complaints Rise, ABI disagrees with FOS and BIBA unhappy with FSCS Levy

The biggest processor of PPI complaints in the UK (Lloyds bank) have reported an increase of 14% in complaint numbers over the second half of 2010.

In particular, PPI complaints jumped by a massive 69% to 148,300 as more customers became aware of the potential of PPI misselling. However, complaints about banking fell by 12% to 154,555, equating to 2.1 complaints for every 1,000 accounts from 2.4 in the first six months of 2010.

It is promising to see Lloyds complaints in other areas reducing. Although whilst consumer concerns focus on PPI misselling - there are still other areas which may rise once PPI matters ultimately reduce. In particular, complaints are rising about packaged account charges.

The ABI has hit out at the Ombudsman Service, questionning their suggestion to substantially increase their reserves – and thus the levy on firms. The ABI said "They (FOS) suggest the main reason for them wanting to do so is the impact that the banks’ judicial review of PPI complaints may cause. Yet the FSA has already confirmed that it expects the majority of PPI complaints to be dealt with by firms, so the FOS is unlikely to see a significant reduction in case income.”

Although the ABI do highlight the FSA's argument that most complaints should be dealt with by the relevant firm, the reality is that we find a substantial amount of cases being placed on hold as a direct consequence of the Judicial Review. Furthermore, with 4500 new cases being presented to the Ombudsman on a weekly basis, it is perhaps careless to suggest their reserves will remain consistently high over the next 6-12 months.

Finally, the British Insurance Brokers Association (BIBA) have added to the furore about levy increases at the FSCS. They say the current FSCS funding model is unfair to the industry and have created template letters to send to local MPs in the hope that they in turn will encourage the Financial Services Authority to "proceed urgently with consulting on a revised model".

This reflects other similar calls to the FSCS over the last few weeks from other bodies. The levy on firms who have never sold PPI could be viewed to be unfair, but an alternative could be equally as unfair on another section of FSA regulated firms. Hopefully, the FSCS will arrive at a reasonable consensus with the industry.

If you think you have been mis-sold a Payment Protection Insurance policy, do not hesitate to contact us via www.ppireturn.co.uk.

More FOS Complaints and FSCS Levy Backlash

More analysis from the Ombudsman (FOS) last week updating us on what we all knew - PPI complaints are continuing to rise at their offices. Around a third of our cases are now with FOS and we have noted they received 25,000 new cases in the last three-month period of last year. The Ombudsman warned the industry that the extra work would affect the levy paid by businesses to the service.

It was commented that the result meant that FOS had been receiving as many as 4500 new PPI complaints a week.

According to the data, the ombudsman received 50,378 new complaints about financial products in the last quarter of 2010. Current accounts were responsible for 10 per cent of all complaints, credit cards accounted for 8 per cent, mortgages 4 per cent and overdrafts and loans 3 per cent of all cases. Of the total number of PPI complaints, 66 per cent were resolved in favour of the consumer. This is certainly much less than the 90% + the FOS were headlining last year.

In other news, brokers continue to lobby for changes within the FSCS as a result of its increased levy on all firms irrespective of whether those firms were involved in the controversial sale of PPI policies. Calls are being made for changes in the way the FSCS imposes their levy increases - which can only be positive for those brokers and IFAs who have not been involved in the sale of the policies.

And, whilst most banks are deciding to leave the PPI industry behind, other companies are seizing the opportunity to offer competitively priced policies (Legal & General and What Insure being two recent candidates).

If you think you have been mis-sold a Payment Protection Insurance policy, do not hesitate to contact us via www.ppireturn.co.uk.

Consumer Champion Feedback and FOS Complaints Rising

MPs have asked the Government to scrap plans to frame the new Consumer Protection and Markets Authority (CPMA) as a consumer champion. The Treasury select committee suggests using the phrase could mislead consumers into believing the new regulator is something very different.

They said “If a regulator is promoted as a consumer champion, consumers may falsely believe all financial products are risk free, creating moral hazard. It is simply not possible to protect every interest at all times.”

The title of Consumer Champion has always been reserved for Martin Lewis and other consumer facing organisations. To suggest a regulator is a 'Consumer Champion' doesnt particularly fit with its overall responsibilities to its members.

On another story, complaints about payment protection insurance (PPI) now make up half of the workload of the Financial Ombudsman Service (FOS). The service received a huge 24,955 PPI complaints in the last three months of 2010, which was 50% of the total number of complaints they had received and nearly twice the number lodged with it six months earlier. The increase is largely a result of the judicial review and banks failing to investigate claims properly.

If you think you have been mis-sold a Payment Protection Insurance policy, do not hesitate to contact us via www.ppireturn.co.uk.

MBNA Restructures its Credit Cards and FSCS burden IFAs with big levy

In an effort to claw back some of money lost from sales of PPI, MBNA have restructured their credit card payment terms. On a selection of accounts, MBNA will expect customers to pay back at least 1% of their outstanding card balance per month, meaning someone with 5000 euros on their card would pay 50 euros per month rather than the current 7 euros. Its yet another example of banks tightening their operations in hard times and a by product of PPI mis-selling.

It was surprising to read (with the Judicial Review decision looming), that the Building Society Association was positively supporting the idea that compulsory mortgage payment protection insurance be added to accounts during the arrangement process. The idea is sound in that it could mean fewer repossessions and ease the burden on state benefits and housing, but inevitably, it will be added to mortgage accounts of customers who will not benefit from it.

The FSCS have imposed yet another levy on banks and IFAs to cover the cost of compensating customers. In particular, there has been major consideration of the need to support the huge gap in PPI mis-selling compensation and some IFAs are now found to be paying huge levies for the mistakes of others. It is unfortunate for some that these increases may continue over the next two financial years - especially as the funds are used for no other purpose but to protect firms which have made their money, are no longer trading, and need to be bailed out by others.

Finally, Martin Wheatley, the outgoing chief of Hong Kong’s financial regulator, will head the UK's new consumer champion authority (Consumer Protection & Markets Authority) when it is created next year. Mr Wheatley will join the FSA in September as managing director for consumer protection and markets. When the FSA is broken up at the end of next year, Mr Wheatley will serve as chief executive of the Consumer Protection and Markets Authority.

If you think you have been mis-sold a Payment Protection Insurance policy, do not hesitate to contact us via www.ppireturn.co.uk.

Judicial Review finished - awaiting a verdict

So, the Judicial Review hearing finished on Friday and Judge Ouseley is going to be making his judgment shortly. We arent sure when this will be - some estimates have suggested Easter, but we are hoping for a quick decision.

Whether the Principles can be used in determination of future PPI complaints will have to be seen but there appeared to be a shift towards a more technical argument used by the BBA on how legal it was for the FSA to simply create the rules without getting feedback from the Treasury.

Despite the Judicial Review, we are still seeing offers arriving from a wide cross section of banks and would urge anybody to make a claim as soon as possible. The FSA has warned some of the banks for putting ALL of their claims on hold despite it being clear that not all will be affected by the Judicial Review. Some believe only a small number of complaints should be tied up by the JR and most of them should be investigated at the very least.

If you think you have been mis-sold a Payment Protection Insurance policy, do not hesitate to contact us via www.ppireturn.co.uk.