Banks too slow to settle PPI claims, says Which?
Which? has warned that banks are pushing borrowers into the arms of claims management firms by taking too long to settle payment protection insurance claims.
Last week the Financial Services Authority revealed that banks paid out £1.9bn in PPI redress last year. Payments hit £441m in December 2011, which also saw the highest monthly number of PPI payouts.
But Richard Lloyd, executive director of Which?, says banks are paying out less than a quarter of the £7.6bn earmarked for refunds.
He says: “Too many people still find the claims process too lengthy. The banks must streamline the process to make it easier to claim.
“Otherwise this leaves an open goal for claims management firms that charge people a hefty fee for putting in a claim, which they could easily do themselves for free.”
Claims management companies accounted for almost half of all cases received by the Financial Ombudsman Service during 2011. It receives 1,000 new PPI complaints every day, most of which relate to PPI sold by banks, attached to credit cards and loans.
It upholds about three in four cases in the consumer’s favour with compensation averaging £2,750.
The increase in complaints is a result of the High Court ruling last April in which the British Bankers’ Association lost an appeal to overturn the Financial Services Authority’s rules for compensating victims of mis-sold PPI.
A spokesman for the BBA says banks are working through the increased level of PPI complaints following the ruling.
He says: “Increased volume reflects the way additional claims made following the court ruling are feeding through the system. Banks largely no longer provide PPI policies. Customers who believe they have been mis-sold PPI should contact their lender directly.”