The Financial Ombudsman Service has today revealed that it’s looking to boost the number of free cases businesses are allowed from three to 25 in 2013 as it prepares to tackle a flood of payment protection insurance complaints over the coming year.
The aim it says is to insure that in the future only 1% of businesses pay any case fees.
For the coming year it will continue to charge businesses only for the fourth and any subsequent complaint each year– so that three quarters of businesses with complaints referred to the ombudsman service again payno case fees.
It will also continue to charge in 2012 a supplementary case fee of £350 for each PPI mis-selling case referred to the FOS.
But this is chargeable only when businesses have more than 25 of these cases a year, reflecting where the costs are actually incurred in sorting out PPI mis-selling on this scale.
Mortgage Strategy set up a government e-petition in September last year as part of our campaign Make Claims Firms Pay, after numerous mortgage brokerages complained that they had been deluged with bogus complaints.
As well as proposing to boost the number of free cases from three to 25, it’s also looking to develop a new group arrangement to more accurately accurately reflect the total costs to the FOS generated by the 10 financial services groups that generate over 70% of its complaints workload.
These new proposals for 2013 come as FOS consults on ways of dealing with what it predicts to be a record year for complaints in 2012.
The FOS says its on track to have dealt with some 1.2 million consumer enquiries in the current financial year and it says this is set to increase to 1.4 million next year. Of these it’s anticipating totake on 285,000 new cases, up from 259,00 in the current financial year – a 25% increase on the previous year.
It’s also anticipating to settle more disputes involving mis-sold PPI than ever before – a record 130,000 cases, which is half of its expected workload.
Tony Boorman, principal ombudsman at the FOS, says: “A year after the High Court ruling gave us legal finality on the approach that financial businesses should take on PPI complaints, it’s disappointing that there’s little finality for significant numbers of consumers who are still waiting for their bank or insurer to deal with their complaint.
“The delays and inconvenience that this causes consumers means the ombudsman now has to gear up for unprecedented demand and volatility in our workload.
“Our proposals to make sure we have the operational capacity to handle record volumes of cases involve those businesses who account for these complaints contributing the most to sorting out the problems.
“But in these difficult economic times – when consumers and businesses alike are tightening their belts and facing uncertainties – this is not welcome news for anyone.”