It’s the gift that keeps on giving. According to the latest figures from the city watchdog, the number of complaints over Payment Protection Insurance is still rising, more than a decade after talk of a mis-selling scandal began.
The Financial Conduct Authority’s complaints data reveals that PPI complaints rose by by 6 per cent between July and December of 2015. In that six month period, 932,000 customers contacted their provider about the controversial insurance product which has cost banks billions of pounds in compensation.
The regulator said that £22.9 billion has been paid out to customers since 2011 – the year a high court ruling made it possible to claim compensation on policies dating back years. Earlier this year Britain’s biggest banks announced they were putting aside a further £5 billion in anticipation of more claims.
Keen to draw a line under the scandal, the FCA has proposed a deadline of spring 2018 for compensation claims, giving customers two years to make a move if they feel they’ve been mis-sold.
If you’re worried for the welfare of the ambulance chasing claims management firms and what they’re going to do with themselves in a post PPI world – and aren’t we all? – other figures from the FCA’s complaints data may give us a clue.
The second most complained about products in the six months to December 2015 were current accounts with 454,276 customers voicing their gripes. While this figure was down 10 per cent on the previous six months (with complaints across the board falling by 1.4 per cent to 2.11 million), half a million people is a sizeable number.
For years now there has been mounting speculation that the next big mis-selling scandal will come from paid for, packaged current accounts with banks already setting money aside to deal with the issue. These accounts, which range in cost from £3 a month to as much as £18, offer a range of benefits from travel and mobile phone insurance to interest-free overdrafts. However, it is claimed that they have been sold on many occasions to customers who can’t actually make use of these so-called benefits.
The monthly cost might be relatively minimal but if you’re paying out for something you get no benefit from it’s clear to see why so many people are aggrieved. Tellingly, the FCA’s figures reveal that while complaints were down, redress payments for banking and credit cards complaints have risen by 27 per cent.
Recently, high street lender Barclays contacted its packaged account customers – or ‘Premier’ if you want to get technical – to inform them of a series of changes to their account, changes that would result in the monthly cost of the account rising from £6.50 to £9.50 (Barclays, as a point of interest, was the most complained about lender).
While complaints over current accounts have dipped slightly, the sheer number of complaints received and the fact that the amount of money being paid out to compensate peeved customers has soared suggests there’s a problem with the way these accounts are being sold.
If the cost of these controversial accounts rises – and the problems plaguing them aren’t addressed – one might speculate that claims firms looking for something to do post spring 2018 may have something to get their grubby little hands on.
Christine Toner is a freelance financial journalist
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