The Association of Mortgage Inter-mediaries has urged firms to co-operate over payment protection insurance complaints.
The Financial Ombudsman Service warned last week that its reserves could be exhausted within six weeks if businesses continue to be uncooperative with complainants over PPI.
Since the British Bankers’ Association applied to the courts for a judicial review of the Financial Services Authority’s complaintshandling approach for PPI, many firms have put dealing with complaints on hold.
FOS says that as a result its caseload has increased and it is receiving 2,500 PPI complaints a week, which is putting a strain on its resources.
Firms need to pay FOS a £500 case fee when four or more complaints are made against them, but FOS cannot charge the fee until the case is closed.
It is unable to close cases until the outcome of the BBA’s court review is known, which is not expected until the end of the year.
FOS predicts it will receive 68,000 PPI complaints in 2010/11, sub-stantially more than the 46,000 cases budgeted for.
Natalie Ceeney, chief ombuds-man and chief executive of FOS, says: “If financial businesses do not co-operate on PPI cases as a result of the legal action, our loss of income from case fees in just one month could lead to an operating monthly deficit of up to £4m.
“This would exhaust our reserves within six weeks.”
Robert Sinclair, director of AMI, says that since no decision has been made in the judicial review, finan-cial institutions should not let the complaints slide.
He says the situation may reach the point where the FSA will need to offer monetary support to FOS.
He adds: “Either the FSA will have to fund the gap or we have got to levy the people who are causing the problem.”