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| BankruptcyNews |
Posted - 23 May 2007 : 09:38:37
Bank charge and PPI disputes on the rise
The number of people complaining to the Financial Services Ombudsman decreased by around 18,000 last year, reflecting the decline in the number of mortgage endowment disputes.
But while overall complaints are down, the number of people in dispute over banking issues and mis-sold payment protection insurance, is up.
Half of the cases that come before the Ombudsman are still related to endowments, but the number of endowment complaints was down by 23,000, from 61% of all disputes in 2006 to 49% in 2007.
The figures all relate to the 12 months leading up to March 31, 2007.
Complaints about controversial loan protection insurance have grown 39% in the last year. The Financial Services Ombudsman said there were 1,832 complaints about Payment Protection Insurance (PPI) in the 2006/07 financial year compared with 1,315 in the previous year.
PPI covers loans, mortgages and credit cards when individuals cannot make payments because of accident, sickness or some unemployment.
PPI has come under fire from angry customers who say that the insurance is overpriced, mis-sold and unfair in terms of the refunds available if they cancel. This is Money has been campaigning strongly against the mis-selling of PPI for the past year.
The FOS said that it thought the overall number of complaints about PPI was low given the number of polices in force - thought to be 20m - and the adverse publicity the product has attracted. However, it shared the concerns of consumer groups that have criticised single-premium PPI polices, where the cost is added to a loan as an up-front one-off payment.
Emma Parker, a spokesman for the FOS, said: 'Complaints usually arise when people come to cancel a policy or renegotiate a loan or mortgage. Then they realise what the cost of the insurance has been and they often feel it was not made clear to them when they took the policy.'
The number of people complaining about their bank is also up significantly - by nearly 50% in the past year - and the number of complaints have doubled since 2004. People in dispute about their current accounts made up 40% of the total number of banking complaints, mostly related to bank charges, and current account complaints more than doubled from 3,543 to 8,061 this year.
The Financial Ombudsman helpline received up to 3,000 phone calls a day from people who had queries about their bank charges. In March 2006 the Ombudsman was handling fewer than 10 disputes each week relating to unfair bank charges. That figure was up to 500 a week a year later.
The Ombudsman said that in the cases it has been involved with, the bank has refunded the customer, so a detailed investigation has never been necessary. But it said it is prepared to do so if circumstances required it.
Many of the complaints dealt with by the Ombudsman were from customers whose bank account had been closed after successfully reclaiming charges. Other complaints were from people who had their accounts 'upgraded' to a fee-charging account without their knowledge, or without understanding the fee structure.
Credit card complaints were up from 2,124 to 2,731. Many of these related to joint liability between the card provider and the supplier of goods and services. Many cardholder disputes involved the purchase of 'holiday club' membership. There were also others who had signed up to 0% deals on balance transfers and purchases and appeared not to understand how and when interest would start to be applied.
The number of people unhappy with their investment products was down significantly. A spokeswoman for the Financial Ombudsman said it was normal for the number of complaints about investments to be lower when the markets were stronger and investors were less likely to be affected by riskier products.
She it was often only when the markets were weaker that people understood the effects of the way risk is built into their investments.
Source: thisismoney.co.uk
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