PPI complaints and claims on the rise

The Financial Ombudsman Service (FOS) – designed to mediate and handle disputes between consumers and financial companies – has reported a dramatic rise in the number of complaints about payment protection insurance.

Also known as PPI, payment protection insurance policies provide consumers with cover if they are not able to pay existing debts such as store cards and credit cards due to illness, injury or unemployment. The FOS has reported that in the last financial year, around 135 people a day officially complained about their PPIs and the number is still growing.

The complaint against businesses offering PPIs to customers is that they are misselling it, throwing it in as part of a loan, credit card or store card deal without explaining to consumers what they are actually paying for. This has led to many consumers claiming for compensation to try and recover their money, and the Financial Services Association (FSA) has penalised these lenders for treating customers unfairly.

Businesses selling PPIs alongside credit cards and personal loans will have to rely heavily on their professional indemnity insurance as they brace themselves for fines from the FSA and consumer compensation claims, not to mention extensive legal costs.

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