True scale of banks' loan insurance deceit becomes apparent
by Luke Whitmore, 2nd August 2011
The number of complaints taken to the Financial Ombudsman
Service has skyrocketed in the wake of the mis-sold PPI judicial
review, which placed an onus upon banks to compensate customers for
the widespread mis-selling of the ill-fated loan insurance.
The FOS stated that the amount of complaints received in the
first quarter of the financial year were more than double the
number for the same period of the previous year, with 81,301 claims
filed with them this year up from 39,576 in 2010. A large
percentage of this number consisted of PPI complaints, with 56,025
of these claims received through April, May and June.
Many of these were thought to have been part of the backlog
which accumulated when the banks put PPI complaints on hold during
the judicial review in the High Court.
However, that same review saw the British Bankers' Association
soundly trounced in court, and the flood of claims which followed
was a direct result of the ruling that new regulations on PPI
mis-selling could be applied retroactively, making millions of
customers eligible to reclaim mis-sold PPI.
Tony Boorman, the principal ombudsman at the FOS, has said that
he believes this to only be the beginning, claiming that it will
take until the end of the current financial year to see the true
impact of the mis-sold PPI scandal on the banks. This is due to the
banks being unable to quibble over any new complaints due to the
new PPI mis-selling regulations which are now in place, as well as
the fact that recent claims will not reach the FOS until they have
been conclusively rejected by the bank in question.
"Banks and others are already reporting record numbers of new
complaints," said Boorman, "and it will be some time before we see
the impact of those on our figures. So it is difficult to tell
whether we will be seeing still higher numbers yet or whether the
figures will now start to decline."
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