Big is Not Best as Financial Services Groups Responsible for Majority of PPI Complaints
The Financial Ombudsman Service reports it is handling 100 Payment Protection Insurance complaints a day. "This," points out PPI lobbyist Sara-Ann Burgess, "further fuels concerns that consumers are either unwittingly purchasing cover they don't need or are confused by jargon and taking out policies they will never be able to claim on."
Braintree, Essex (PRWEB) November 21, 2008 -- The Financial Ombudsman Service reports it is handling 100 Payment Protection Insurance complaints a day. "This," points out PPI lobbyist Sara-Ann Burgess, "further fuels concerns that consumers are either unwittingly purchasing cover they don't need or are confused by jargon and taking out policies they will never be able to claim on."
Sara-Ann Burgess, MD Burgesses
Despite the Payment Protection sector coming under close scrutiny from the Competition Commission and a recent announcement of proposed remedies designed to ensure providers treat consumers more fairly, complaints continue to rise at an alarming rate.
In the financial year up to 31 March 2007, the FOS received 1,832 complaints. The following year, up to 31 March 2008, it handled 10,652 cases - an increase of over 580%.
The independent complaints expert predicts next year's tally will be even higher. In receipt of 100 complaints a day, or 2000 monthly, staff expect the figure up to 31 March 2009 to top 24,000.
Sara-Ann comments: "This is staggering. The dubious sales practices of immoral providers are coming to light with more and more people realising they have policies that aren't worth the paper they're written on. The rising complaint figures also evidence the incompetence of firms who are unable to deal with customers at their level, forcing the aggrieved to turn to the FOS.
"I fear the FOS statistics will undermine consumer confidence and turn people away from PPI, which in my view, could leave them financially exposed to hardship should their income be interrupted."
The majority of cases are against those with the biggest market share - 11 financial services groups that offer loans and insurance. Around 50% of cases are upheld and single premium policies generate the most complaints (where the premium is added onto the cost of the loan and the consumer ends up paying interest on both). The Commission has called for single premium products to be abolished.
To put the scale of PPI mis-selling into context, the second most complained about general insurance product is motor with 6009 cases received last year and around 40% upheld.
Sara-Ann concludes: "Motor is dwarfed by PPI and I worry this is the tip of the iceberg. However, rather than turn away from this product, it's important that in this current climate people purchase a financial protection policy - it will provide a monthly income should they lose their job, have an accident or become sick.
"Prior to purchase, consumers must question whether they're eligible for the policy and if they are, check out the small print and any exclusions before signing on the dotted line. It's also worthwhile asking whether the provider has received many complaints about its products or service - a good indicator of whether it treats customers fairly.
"There are those out there, such as independent providers like British Insurance, who have never received a customer complaint about its products or service. So I urge consumers to shop around, don't feel pressurised into buying cover from the credit provider and look out for companies who explain things simply and without jargon."
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