Banks and insurers have been slammed for dragging their feet on Payment Protection Insurance (PPI) refunds as a financial watchdog warned that a record number of mis-selling cases are still waiting to be resolved.
The Financial Ombudsman Service said it has 130,000 cases on its books in the financial year 2012/13 – up from 109,500 this financial year and more than double the 60,000 PPI cases resolved in 2010/11.
Since the high number of complaints is likely to make up the half of its workload, the FOS is consulting on plans on how to cope, including proposing businesses pay an additional fee of £350 for PPI cases on top of the £500 standard case fee. The financial watchdog added it would not be fair for those not involved in mass PPI claims to cover the costs.
PPI was sold to consumers on the basis that it would cover repayments of loans or card debt in the event of sickness or unemployment, but a widespread scandal emerged. Significant numbers of policyholders found that the insurance was useless to them because they would be unable to claim, for example if they were self-employed or retired.
The FOS said banks have subjected customers to ‘delays and inconvenience’ despite agreeing to contact thousands of customers for refunds by not appealing against a High Court ruling that meant rules relating to the mis-selling of PPI could be applied retrospectively.
The British Bankers’ Association decision in May 2011 not to appeal against the High Court ruling meant that more than three million people were in line for refunds and is expected to result in an overall bill of between £7billion and £9billion.
The Financial Services Authority recently said that more than £1billion was paid out in the first 10 months of 2011 to customers complaining about PPI. The FOS expects to take on 285,000 new cases in the next financial year overall, compared with 259,000 this year.
Sally Bowyer, Managing Director of leading claims firm, BrunelFranklin.com said: “We continue to see a huge increase in PPI refund applications as public awareness gradually rises. Cases of mis-selling are still coming to light; as people feel the financial squeeze and learn of the PPI refund successes of friends, family and colleagues, the upward trend in the number of people seeking refunds is likely to continue for the foreseeable future.”
Learn more about PPI refunds and find out if you could apply for a refund today! Visit the website www.brunelfranklin.com or call Brunel Franklin, free, on 0800 051 54 51.