Tweet
http://www.ft.com/cms/s/2/9469e97c-f...077b07658.html
Complaints are ‘deliberately obstructed’
By
Published: February 13 2009 18:13 | Last updated: February 13 2009 18:13
Lenders and other companies selling payment protection insurance (PPI), are facing new, high-level accusations of “deliberately obstructing” thousands of legitimate mis-selling complaints.
The comments from the Financial Ombudsman Service (FOS), unprecedented in their explicitness, come after the FOS noted a “significant” increase in rulings in favour of consumers.
Typically, about 40 per cent of consumers will see the ombudsman overturn a decision by a company to reject their complaint, meaning the company can be forced to pay redress. But recently, this rate has climbed to 90 per cent – a record level, and enough to worry the ombudsman.
“We have reported to the Financial Services Authority (FSA) those firms who seem to be systematically and wilfully mishandling their customers’ complaints,” said Emma Parker a spokesperson for the FOS.
“Some firms are not giving their customers a fair hearing or dismissing their complaints on spurious grounds. Others appear to be being deliberately obstructive by appealing against an adjudicator’s decision when the cases are routine,” she added.
The ombudsman has previously raised concerns about the handling of complaints to the FSA. But the situation is said to have become more pressing with PPI complaints surging to 500 a week, and such a large percentage now being upheld in consumers’ favour.
“We should never see upheld rates at this level,” said Parker. “Many of these cases should have been resolved by the firms.”
The companies involved are large and well known and are typically lenders rather than insurers, selling PPI alongside credit cards and loans.
The cover is designed to help meet monthly loan repayments in the event of accident, sickness or job loss but the bulk of complaints are for misselling.
The PPI industry said this week it was unaware of any companies that were “deliberately obstructing” customer complaints.
“It is not in lenders’ interests to adopt an obstructive stance,” says Eric Leenders, executive director of retail with the British Bankers Association. “We are applying the rules as we have interpreted them.”
“But there is a fundamental difference with the FOS over this interpretation.”
He said that his members wanted to work with the ombudsman to find a “structured solution” to the large volume of complaints, expected to more than double to 25,000 this year.
“However, this appears to be at an impasse,” he added.
The Finance and Leasing Association (FLA), which is in discussions with the FSA and ombudsman over new complaint handling standards, said: “Any evidence of inappropriate practice or breaches of the code will be taken seriously and investigated. The FLA has a robust code of practice that requires its members to treat customers fairly, including when dealing with complaints.”
In response to the ombudsman’s comments, the FSA said it “was engaging with the FOS on what the appropriate response should be to the important issue of PPI complaints”.
Consumer groups said latest developments at the ombudsman service would do little to restore confidence in the sector, which has seen some large companies fined millions of pounds for poor selling practices.
Following its latest review, the Competition Commission last month imposed a ban on the sale of single premium PPI.
“Firms should have learned lessons from all the recent enforcement action,” says
Lucy Widenka, personal finance campaigner with Which?, the consumer champion. “They must start treating customers fairly and comply with the rules that are already in place.”
Complaints are ‘deliberately obstructed’
By
Published: February 13 2009 18:13 | Last updated: February 13 2009 18:13
Lenders and other companies selling payment protection insurance (PPI), are facing new, high-level accusations of “deliberately obstructing” thousands of legitimate mis-selling complaints.
The comments from the Financial Ombudsman Service (FOS), unprecedented in their explicitness, come after the FOS noted a “significant” increase in rulings in favour of consumers.
Typically, about 40 per cent of consumers will see the ombudsman overturn a decision by a company to reject their complaint, meaning the company can be forced to pay redress. But recently, this rate has climbed to 90 per cent – a record level, and enough to worry the ombudsman.
“We have reported to the Financial Services Authority (FSA) those firms who seem to be systematically and wilfully mishandling their customers’ complaints,” said Emma Parker a spokesperson for the FOS.
“Some firms are not giving their customers a fair hearing or dismissing their complaints on spurious grounds. Others appear to be being deliberately obstructive by appealing against an adjudicator’s decision when the cases are routine,” she added.
The ombudsman has previously raised concerns about the handling of complaints to the FSA. But the situation is said to have become more pressing with PPI complaints surging to 500 a week, and such a large percentage now being upheld in consumers’ favour.
“We should never see upheld rates at this level,” said Parker. “Many of these cases should have been resolved by the firms.”
The companies involved are large and well known and are typically lenders rather than insurers, selling PPI alongside credit cards and loans.
The cover is designed to help meet monthly loan repayments in the event of accident, sickness or job loss but the bulk of complaints are for misselling.
The PPI industry said this week it was unaware of any companies that were “deliberately obstructing” customer complaints.
“It is not in lenders’ interests to adopt an obstructive stance,” says Eric Leenders, executive director of retail with the British Bankers Association. “We are applying the rules as we have interpreted them.”
“But there is a fundamental difference with the FOS over this interpretation.”
He said that his members wanted to work with the ombudsman to find a “structured solution” to the large volume of complaints, expected to more than double to 25,000 this year.
“However, this appears to be at an impasse,” he added.
The Finance and Leasing Association (FLA), which is in discussions with the FSA and ombudsman over new complaint handling standards, said: “Any evidence of inappropriate practice or breaches of the code will be taken seriously and investigated. The FLA has a robust code of practice that requires its members to treat customers fairly, including when dealing with complaints.”
In response to the ombudsman’s comments, the FSA said it “was engaging with the FOS on what the appropriate response should be to the important issue of PPI complaints”.
Consumer groups said latest developments at the ombudsman service would do little to restore confidence in the sector, which has seen some large companies fined millions of pounds for poor selling practices.
Following its latest review, the Competition Commission last month imposed a ban on the sale of single premium PPI.
“Firms should have learned lessons from all the recent enforcement action,” says
Lucy Widenka, personal finance campaigner with Which?, the consumer champion. “They must start treating customers fairly and comply with the rules that are already in place.”
Comment