According to the latest figures, compensation has been paid out to hundreds of thousands of people for being mis-sold payment protection insurance, or PPI, with banks forking out £557m in the first 6 months of 2011 alone.
The FOS, Financial Ombudsmen Service, which rules on customers complaints about the controversial insurance that the banks have rejected, have seen the number of cases that it has had to become involved in climb to above 3000 a week in the last 2 months. It has upheld 9 out of 10 PPI cases in the customers favour, with the compensation average £2750. The payments have ranged from £200 to over £10,000.
Natalie Ceeney is the chief financial ombudsman has said in the latest newsletter from the organisation that the number of complaints have risen so much that the FOS have been forced to take on extra staff, and they have found the numbers pretty unsettling. A total of 532,000 people have made complaints about PPI during the first half of the current financial year.
PPI is an insurance that was designed to provide the consumer with cover in the cases of such things as redundancy or illness and was sold in tandem with financial products. The problem was that this was often done without the customers knowledge, and very rarely paid out.
The main banks on the high street were ordered in May by the Financial Services Authority to speed up the payments after a court challenge that was stalling the compensation payments was abandoned. The banks had dealt with the majority of the claim backlog of 200,00 by the end of August, the FSA’s deadline, and payed out over £230m in compensation during that month alone.
The rules of the FSA stipulate that complaints had to be dealt with within 8 weeks, but that doesn’t include compensation payments. One customer received a letter from Lloyds TSB back in August saying that he would be receiving £13,000, but as yet this money hasn’t materialised.