Ombudsman criticises regulator's response to scandal
by Luke Whitmore, 21st June 2011
The Financial Services Authority's handling of the mis-sold PPI
scandal has received heavy criticism from a spokesman for the
Financial Ombudsman Service.
Tony Boorman, the principal ombudsman at the FOS, has said that
the FSA failed to act swiftly or strictly enough on the issue of
banks selling Payment Protection Insurance inappropriately to
borrowers.
Boorman was speaking at a seminar on dealing with complaints,
hosted by the British Bankers' Association, addressing the topic of
what exactly could be learned from the mis-sold PPI debacle.
"Much of the focus here has been on the role of the regulator,"
the ombudsman stated. "There is a perception that too often in the
past the regulator has, for whatever reason, been unwilling or
unable to act, or at least to do so promptly.
"Whatever your perspective on the issue, I don't think any of us
would disagree that earlier regulatory action on PPI would have
been in the public interest."
He explained that "early and decisive action is in the interests
of all parties", saying that "too often we have seen problems that
are at first ignored, then denied, then minimised, and only
eventually tackled when it is too late".
The lending institutions responsible for PPI mis-selling did not
escape rebuke, however, with the ombudsman commenting that "it
sometimes seems as if this industry is addicted to regular
mis-selling scandals".
According to Boorman, the banking sector should become "more
open to accepting critical observations about past practices and
more ready to propose ways in which those problems can be resolved
fairly, efficiently and promptly".
After PPI, a type of loan insurance, was systemically mis-sold
to borrowers who did not want it or could not use it, the FOS
received more than 100,000 complaints regarding banks' poor
handling of customers who lodged claims for compensation.
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