PPI News

Monthly PPI Refund Payments Continue to Outstrip 2014

September 14, 2015

The amount of monthly PPI refund payments paid to customers continues to stay ahead of 2014 levels according to the latest data released by the FCA.

Each month, the Financial Conduct Authority (FCA) releases data relating to the value of PPI refund payments paid to bank and credit card customer who were mis-sold payment protection insurance. The city watchdog has just published its data for July 2015 which although showing a slight decrease on July 2014, keeps the total value of PPI refund payments in 2015 ahead of the comparative period in 2014.

In July 2015, £327.9 million was paid out by banks and credit card companies to customers who were mis-sold payment protection insurance, bringing the total value of PPI refund payments for the year to date to £2.719 billion. By comparison, the total for 2014 up until the end of July was £2.659 billion. However, little of the increase can be attributed to banks and credit cards adopting fairer banking practices.

Last month the Financial Ombudsman Service published its complaints data for the first quarter of 2015/16 (April 2015 – June 2015) and the first half of the calendar year (January 2015 – June 2015). Both revealed quite disturbing figures about the level of banking practices being adopted by banks and credits card companies, with overall uphold rates for PPI complaints running at 74% and 76% respectively.

The worst offender among the major financial institutions was again the Lloyds Banking Group. More than 40,000 new PPI-related complaints were accepted by the Ombudsman from customers of the Lloyds Banking Group (which includes Lloyds PLC, Bank of Scotland, Halifax, and the Cheltenham & Gloucester Building Society), with 93% of PPI-related complaints against Lloyds Bank PLC upheld in the customer´s favour.

The Lloyds Banking Group recently increased its provision to pay PPI refund payments by £1.4 billion, and the group´s CEO – Antonio Horta-Osorio – warned that another £1 billion could be added to the provision during 2015, with another £2 billion allocated in 2016. Mr Horta-Osorio is possibly considering a soon-to-be-delivered statement from the FCA regarding the implications of the recent Plevin –v- Paragon Personal Finance court case, in which the claimant was successful in claiming that PPI was mis-sold to her because the value of the sale commission was not made clear.

If the FCA confirms all customers are entitled to PPI refund payments for the sales person´s lack of transparency, the value of monthly PPI refund payments could outstrip the record levels seen in 2012.

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Uphold Rate for PPI Complaints to Ombudsman Rises to 76%

August 24, 2015

The half-yearly complaints data report from the Financial Ombudsman Service has revealed that the uphold rate for PPI complaints has risen to 76%.

The Financial Ombudsman Service is an independent arbitrator when disputes arise between financial institutions and their customers. Every six months, the Ombudsman publishes a table which reveals how many complaints it has received about payment protection insurance and other financial products.

As has been widely forecast, the number of new complaints about PPI has declined considerably. However, against most predictions, the uphold rate for PPI complaints – the percentage at which complaints are found in the customer´s favour – has increased substantially from an average of 60% in 2014 to 76% in the first half of 2015.

The significance of the rise is that financial institutions have for a long time been accusing claims management companies of submitting speculative claims for PPI compensation. It was expected – according to the credit providers´ allegations – that the uphold rate for PPI claims would fall closer to 50%. However, quite the opposite has occurred.

One of the reasons for such a substantial rise in the uphold rate for PPI complaints appears to be that many customers of Clydesdale Bank have not waited for the company to complete its review of PPI claims – ordered by the Financial Conduct Authority last April – before contacting the Ombudsman with a complaint. The uphold rate for Clydesdale Bank PPI claims was 85%.

However, the high uphold rate for PPI complaints against the Clydesdale Banks was yet again dwarfed by units of the Lloyds Banking Group. The Ombudsman found in the customer´s favour in 93% of PPI complaints against Lloyds Bank PLC, in 86% of PPI complaints against Black Horse Limited and in 66% of PPI complaints against the Bank of Scotland – who, for the first time ever, became the leading source of new PPI complaints with 15,002 new cases accepted by the Ombudsman compared to 13,319 new PPI cases against Lloyds Bank PLC and 12,111 new PPI cases against Barclays Bank.

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Refunds of PPI Compensation up Year-on-Year

July 15, 2015

According to the latest figures from the Financial Conduct Authority, refunds of PPI compensation have increased year-on-year by almost £100 million.

Since January 2011, the Financial Conduct Authority has maintained a register of how much PPI compensation is refunded to consumers each month. The latest addition to the register shows that in May £390.4 million was paid out by banks and other credit providers in refunds of PPI compensation.

This brings the total amount of refunds of PPI compensation paid out so far in 2015 to £1.985 billion – almost £100 million more than was paid out at the corresponding stage of 2014 (£1.886 billion) – and the total amount paid out since the Financial Conduct Authority started its register to more than £20 billion.

The year-on-year increase in refunds of PPI compensation implies that the volume of PPI complaints being made by ripped-off consumers is not declining as quickly as was forecast; although some of the increase could be attributable to the re-assessment of previously under-settled claims or disputes being resolved in favour of the consumer by the Financial Ombudsman Service.

The Ombudsman is due to release its first half year report in the near future, when it will be revealed how many unresolved PPI complaints still require investigation. In January this year, the independent arbitrator revealed that there was a backlog of 280,000 complaints to be resolved and that new complaints may take up to eighteen months to resolve because of their increasing complexity.

However, there was better news regarding the PPI complaints procedure last week, when it was revealed that the Financial Conduct Authority had approved the Ombudsman´s application for certification under the “Alternative Dispute Resolution (ADR)” directive. Once certified as an ADR, the Ombudsman will have to resolve disputes within a ninety day period.

Although the certification does not take effect until July 2017, the Financial Ombudsman Service will have had to clear it desks of all disputes lasting longer than ninety well before then and will be working hard to resolve the current backlog of complaints as quickly as possible – enabling more consumers to receive their refunds of PPI compensation in the near future.

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Customers Still Disputing Banks´ PPI Decisions at Alarming Rate

May 22, 2015

Customers are still disputing banks´ PPI decisions at an alarming rate according to the 2014/2015 Annual Review from the Financial Ombudsman Service.

The Financial Ombudsman Service has recently published its 2014/2015 Annual review, and among the 180 pages on the report, one thing is abundantly clear – customers are still disputing banks´ PPI decisions at an alarming rate.

Despite a drop of nearly 50% in the number of PPI-related complaints received by the independent arbitrator (from 399,939 in 2013/2014 to 204,943 in 2014/2015), customers are disputing banks´ PPI decision at a rate of more than 560 per day.

The Review acknowledges that a high percentage of complaints (79%) are made by claims management companies on the behalf of customers, but a high percentage of these referred complaints about PPI decision are still being resolved in the customer´s favour.

New cases in which customers are disputing banks´ PPI decisions still account for 63% of the Ombudsman´s workload and although this figure represents a decline from the previous three years, the nature of the complaints is becoming more complex.

Highlighted within the Ombudsman´s review are complaints about “comparative redress” – where customers have been offered the difference between the cost of an unsuitable (usually single-premium) PPI policy and what they would have paid for an alternative policy that the bank thinks would have been more appropriate for them.

The Ombudsman has to check every new policy to decide whether it agrees or disagrees with the banks´ decisions and then inform each customer what the bank has done because comparative redress is not often clearly explained. Due to cases such as these the Financial Ombudsman Service still has a substantial number of complaints to investigate.

Chief Ombudsman Caroline Wayman said: “The world has moved on and changed significantly since I first joined the Ombudsman as an adjudicator in 2001. Yet our workload over the last 15 years has been constantly dominated by the past – clearing up the fall-out of the mass claims and mis-selling scandals of the last decade and a half.”

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Rise in PPI Compensation Payments Goes Against S&P Prediction

May 15, 2015

The latest data released by the Financial Conduct Authority shows that PPI compensation payments have increased year-on-year for the third month in a row.

On the Financial Conduct Authority´s website, the city watchdog maintains a table recording the PPI compensation payments made each month by banks and other credit providers. The table has just been updated to include the PPI compensation payments for February 2015 – the third month in a row that PPI compensation payments have increased compared to twelve months ago.

The figure for February 2015 – £361 million – is a 9.5% increase on the £329.5 million that was paid in PPI compensation payments in February 2014. The percentage increase is similar to the rise in PPI compensation payments identified in January 2015 (£424.5 million from £389.2 million) and follows the 26% year-on-year increase in PPI compensation payments seen in December 2014.

The rise in PPI compensation payments does not necessarily indicate that more PPI claims are being submitted by ripped-off customers, just that more are being settled. It is possibly the case that banks and other credit providers are treating their customers´ claims more fairly than before – when many customers had to appeal to the Financial Ombudsman Service to recover what they were due.

Until the Financial Ombudsman Service produces its H1 report at the end of June, the reason for the rise in PPI compensation payments can only be a matter of speculation. However, the upward trend in PPI compensation payments appears to go against a prediction by the ratings agency Standard & Poor that “the worst period for PPI provisions has now passed”.

The rating agency´s prediction came in a report forecasting how much the four leading banking groups may still be liable for to pay for past “mistakes”. Since 2010, Lloyds, Barclays, HSBC and the RBS Group have paid out more than £42 billion in fines, charges and redress – not just for the mis-selling of PPI, but also for the mis-selling of interest rate products, LIBOR rigging, and the manipulation of foreign exchange markets.

Standard & Poor forecast that the four banking groups would allocate a further £19 billion before the end of 2016 to pay for their previous wrong-doings – a forecast that was followed by the announcements that Barclays was setting aside £800 million to pay fines for foreign exchange manipulation and £150 million for PPI compensation payments, and that the RBS Group and the HSBC Group were both setting aside a further £100 million towards their PPI obligations.

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Ombudsman Receiving More Complex PPI Complaints

February 26, 2015

The Financial Services Ombudsman has reported that it is receiving a higher number of complex PPI complaints and appeals against banks´ decisions.

The announcement of the increasing number of complex PPI complaints was released in the Ombudsman´s second half report for 2014. The independent arbitrator of financial disputes revealed in the report that the total number of PPI-related complaints and appeals fell from 133,000 in the first six months of the year to just under 105,000 between July and December.

PPI ClaimsHowever, PPI-related complaints and appeals still account for nearly two-thirds of the Ombudsman´s workload and there has been a changing trend in the nature of issues customers are asking the service to resolve, which – according to Chief Ombudsman Caroline Wayman – “are becoming increasingly hard-fought and more complex”.

Despite the increase in complex PPI complaints, the Ombudsman is achieving significant results in investigating claims and appeals on behalf of customers. 82% of PPI complaints made against certain units of the Lloyds Banking Group were upheld in the second half of 2014, and 68% of the PPI complaints made against Barclays Bank PLC.

Other credit providers against which the Financial Services Ombudsman achieved significant uphold percentages included the HFC Bank (part of the HSBC Group – 83%), Citibank (74%) and Capital One Credit (60%).

Unsurprisingly, the Lloyds Banking Group and Barclays Bank PLC were identified in the Ombudsman´s half-yearly report as Britain´s most complained about financial institution. According to data available on the Financial Services Ombudsman´s website, more than 36,000 of the PPI complaints received between the second half of the year (from a total of 105,000) were made against the Lloyds Banking Group, while 15,877 complaints were made about the service provided by Barclays Bank PLC.

Other financial institutions that were recorded as failing to satisfy their customers´ expectations of service included the HSBC Group (9,740 complaints), the RBS Group (6,914 complaints), Capital One (6,289 complaints) and the Santander Group (3,917 complaints).

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PPI Compensation Claim Procedures put under the Spotlight

January 30, 2015

The Financial Conduct Authority has announced that it is to review PPI compensation claim procedures to see if the current approach is meeting objectives.

The current PPI compensation claim procedures have two objectives – to secure appropriate settlements of compensation for customers and enhance the integrity of the financial system in the UK. Since 2011, the Financial Conduct Authority (FCA) has overseen PPI compensation claim procedures, and the FCA is now conducting a review to determine whether the current procedures are meeting their objectives or need changing.

Measures being looked at by the city watchdog include a consumer awareness campaign, the introduction of time limits on PPI compensation claims and other changes to the current claim procedures. While the review is ongoing, banks and other credit providers have been told to continue using the existing PPI compensation claim procedures until the FCA unveils its conclusions from the review in the summer.

Since January 2011, the FCA has overseen more than 14 million complaints from customers that were mis-sold PPI – while banks have paid out more than £17.3 billion in PPI compensation. The latest monthly data from the FCA (October 2014) indicates a slight decline in the amounts of PPI compensation being paid each month:

January £389.2m
February £329.5m
March £349.8m
April £410.3m
May £407.4m
June £390.3m
July £383.2m
August £312.8m
September £353.8m
October £375.6m

However, the trend of declining PPI compensation payments has a long way to go before the scandal draws to a close. Just last month, Caroline Wayman – the Chief Financial Services Ombudsman – commented she expects her department to be “dealing with the fallout from PPI for several years yet”. Ms Wayman revealed that the Ombudsman service is still receiving more than 4,000 complaints each week from customers who have had their claims for PPI compensation unfairly rejected, delayed unnecessarily or underpaid in total.

The Ombudsman has a backlog of over 280,000 PPI-related complaints – more than half of which are expected to be upheld in the customer´s favour. This would indicate that the current PPI compensation claim procedures are not meeting the objective of enhancing the integrity of the financial system in the UK. It will be interesting to see what conclusions are made by the FCA when its review of the current PPI compensation claim procedures is concluded.

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Arbitrator Predicts that PPI Complaints to the Ombudsman will Continue for Years

January 6, 2015

PPI complaints to the Ombudsman are likely to continue for years according to the Budget & Planning Report for 2015 released by the Financial Services Ombudsman.

The Budget and Planning Report for 2015 reveals that the number of PPI complaints to the Ombudsman has fallen from a peak of 12,000 per week in 2012; but that the independent financial disputes arbitrator still has 280,000 complaints outstanding from customers who claim to have been unfairly treated by their banks and credit providers.

More than 87% of complaints to the Financial Services Ombudsman relate to unfairly rejected claims for PPI compensation, a failure to deal with claims in a timely manner, or an incorrect calculation of compensation; and although the arbitrator employed 2,000 extra staff last year to deal with outstanding PPI complaints to the Ombudsman, the intention is to employ a further 200 staff in order to reduce the backlog of complaints to 180,000 by the end of 2015.

Writing in the Budget and Planning Report for 2015, Chief Ombudsman Caroline Wayman commented “As we work through the unprecedented number of PPI cases we have received over the last few years, it is clear that we will be dealing with the fallout of PPI for several years yet. Complaints about PPI are still the main driver of financial disputes, and although the numbers are declining, it will be years before we can truly say that this misselling scandal is over”.

Ms Wayman told reporters “Our plans take into account the increasingly hard-fought and complex nature of the cases we are seeing – not only in PPI but also in areas like mortgages and pensions”. She added that more than 4,000 PPI complaints to the Ombudsman are still being received each week – with the majority being upheld in the customer´s favour.

Martin Wheatley – the Chief Executive of the Financial Conduct Authority (FCA) – has said that he expects credit providers who missold PPI to treat claims for PPI compensation fairly and pay the correct amount of compensation when it is due to their customers. In August, the FCA ordered a review of more than 2½ million claims for PPI compensation after it was revealed that credit providers had been unfairly rejecting claims for PPI compensation or incorrectly calculating the value of PPI refunds.

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Ombudsman Overturning Up To Three-Quarters of Disputed PPI Decisions

September 2, 2014

According to a report from the Financial Ombudsman Service, up to three-quarters of disputed PPI decisions are being overturned in favour of the consumer.

The latest report from the Financial Ombudsman Service reveals that disputed PPI decisions – most often complaints to the Ombudsman about the unfair rejection of PPI claims – are running at “significant levels” despite an overall fall in the number of cases accepted for investigation during the first six months of 2014.

Compared to the second half of 2013, when the Ombudsman received 193,054 complaints about disputed PPI decisions, 133,819 complaints were accepted for investigation – with the Lloyds Banking Group once again being the most complained about financial institution in the UK.

In the first six months of the year 26,209 PPI-related complaints were received about Lloyds Bank PLC (formerly Lloyds TSB), 24,134 PPI-related complaints about the Bank of Scotland and more than 2,500 PPI-related complaints about other entitles within the Lloyds Banking Group.

This represented almost 40% of the disputed PPI decisions received within the six month period, and it was significant to note that 73% of disputes between customers and Lloyds Bank Plc were found in favour of the consumer – higher than the overall average of 64% of complaints being resolved in favour of the consumer.

Chief Ombudsman, Caroline Wayman, said: “Responsibility for sorting out the mass mis-sale of PPI is still the major part of the Ombudsman’s workload. But during the first half of 2014 there’s been a marked change in the type of complaints consumers are asking us to resolve – as underlying attitudes become more entrenched and the issues involved get more complex”.

She continued: “We’re seeing more and more people turn to us in frustration where they feel their bank or insurer simply doesn’t understand or really care. And we’re hearing growing dissatisfaction from people about being processed industrially as a number rather than being listened to as an individual customer”.

Ms Wayman added that the volume of disputed PPI decisions could be reduced if credit providers communicated their decisions to their customers with more clarity. She said that by giving their customers more thoughtful and considerate responses, banks could sort out many of the problems at an earlier stage and prevent disputed PPI decisions being escalated to the Ombudsman.

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FCA Orders New Assessment of PPI Compensation Decisions

August 29, 2014

The Financial Conduct Authority has ordered a new assessment of PPI compensation decisions dating back to 2012 to ensure that customers were treated fairly.

The FCA´s order to reassess historic PPI compensation decisions follows recent allegations that PPI compensation claims were unjustifiably rejected, miscalculated and underpaid. The new assessment affects PPI claims on which decisions were made in 2012 and 2013 irrespective of whether customers received compensation for being missold PPI or not.

The aim of the new assessment of PPI compensation decisions is to make sure that PPI claims were handled according to FCA guidelines and that customers were treated fairly. The FCA´s order to review was prompted by an article appearing in the Times in which it was claimed that a substantial number of PPI refund claims were randomly rejected.

According to the Times article, an undercover reporter was allegedly told during his training to be a claims handler for Lloyds that the thought process behind the randomly rejection of PPI refund claims was because customers would often not pursue compensation for being missold PPI once their initial claim had been rejected.

More recent allegations of unfair practices have included that payments of PPI compensation are being deliberately miscalculated to save banks money and that loopholes are being exploited in the payment of single premium PPI claims.

BBC investigators found that credit providers neglected to include overdraft charges that were triggered by PPI premiums in their calculations of PPI refunds, and that the Lloyds Banking Group were using the “comparative redress” loophole to underpay customers who were missold a PPI policy with a single premium.

The new assessment of PPI compensation decisions is also a reaction to the large volume of complaints made to the Financial Services Ombudsman which are subsequently upheld once investigated. Currently more than two-thirds of PPI complaints to the Ombudsman result in decisions being overturned – confirming the FCA´s opinion that credit providers are unfairly rejecting PPI compensation claims or refunding customers less than are entitled to.

Martin Wheatley – the Chief Executive Officer at the FCA – commented that the new assessment of PPI compensation decisions was a “positive move”. He said that the review of previously rejected claims and underpaid compensation settlements was “an important step in rebuilding trust in financial institutions”. The mis-selling of PPI is an unprecedented scandal in the financial industry, and Mr Wheatley acknowledged that “there have been some issues along the way”.

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