It's more than eyebrows that should be raised - the Financial Services Authority should heavily fine and 'name and shame' the perpetrators responsible for the highest proportion of complaints. Then it should ban them from selling PPI.
Braintree, Essex (PRWEB) December 17, 2008
Banks and building societies are failing their customers when selling Payment Protection Insurance and remiss when handling complaints according to PPI lobbyist Sara-Ann Burgess from Burgesses.
Her comments follow feedback from the Financial Ombudsman Service's Chief Ombudsman, Walter Merricks, who recently voiced concern over the escalating number of PPI complaints his staff are having to deal with.
PPI pays a monthly benefit should an individual's salary stop due to accident, sickness or unemployment, meeting bill commitments for up to a year. Whilst invaluable in this current economic climate, consumers are wary of a product that has drawn so many complaints and are turning their backs on this cover and leaving themselves unnecessarily exposed to financial hardship should redundancy or illness occur.
Since January this year, the FOS has received over 25,000 complaints relating to the sale of PPI. Merricks comments that traditionally, the Ombudsman's role was seen as dealing with individual disputes relating to one-off issues and advises eyebrows would be raised at the FOS handling a workload involving thousands of similar complaints, all with the same financial product or problem.
Sara-Ann says: "It's more than eyebrows that should be raised - the Financial Services Authority should heavily fine and 'name and shame' the perpetrators responsible for the highest proportion of complaints. Then it should ban them from selling PPI."
She continues: "Lenders clearly don't have the processes in place to treat customers fairly in the first place and then fail again, when it comes to handling complaints. It's all too easy to fob-off dissatisfied customers in the hope they won't want the hassle of having to contact the Ombudsman - well these figures prove otherwise.
"High Street PPI providers must get their act together in 2009 and evidence they really are doing the right thing - only then will the complaint figures come down. I'm sure they'd make changes if they thought they might lose this valuable income stream. It's clear lenders don't put customers first - they are arrogant, full of their own self-importance and undermining confidence in financial services as a whole."
Merricks is also concerned that confidence in this sector is waning and warns that if businesses continue to be unable to puts things right when they are in the wrong then widespread redress to tackle widespread consumer detriment - ie a collective resolution - will be called for.
The FOS confirms that the majority of complaints are against the mainstream lenders and Sara-Ann believes a more effective and hard-hitting punishment is needed: "They obviously can't be trusted to sell it in the right way to the right people, so only allow those who have a proven track record to sell the policies."
Sara-Ann concludes: "Independent providers are a much safer bet - not only are the premiums more competitive, but the benefits are wider and consumers can be secure in the knowledge they will not be ripped-off. When properly sold PPI comes into its own during times of financial hardship - it allows claimants to keep their head above water via monthly insurance payouts that can be used to pay bills.
"Not only are the underhand tactics of lenders causing thousands of PPI policyholders to complain, but they are stopping thousands more from purchasing much-needed cover because the trust had gone. I urge consumers not to 'tar all providers with the same brush'."
Independent PPI provider, British Insurance, has this year won a string of accolades for its policies and way in which it treats customers fairly. The firm has a 100% customer retention rate and has never received a product or service complaint.
British Insurance charges £3.40 per £100 for unemployment cover, £3.90 per £100 for accident, sickness and unemployment and £1.90 per £100 for accident and sickness. It has policies for home owners, those renting and people in shared ownership schemes and offers a back to work assistance programme.