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PPI policies under the microscope

PPI policies under the microscope

Category: Credit cards

Updated: 19/05/2010
First Published: 19/05/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Payment Protection Insurance (PPI) was the most complained about financial product of last year, as increasing numbers of consumers voiced their concerns over the selling practices of banks and insurers.

New figures from the Financial Ombudsman Service (FOS) revealed it had resolved a record 166,321 disputes over the past 12 months, a 46% rise on the previous year, with half of these cases resulting in compensation being paid.

Top of the offenders list was PPI, which accounted for three in every ten complaints that FOS received in the 2009/10 tax year, an increase of 58% on the previous year.

PPI is designed to make sure that borrowers can still pay off loans including credit cards should they become ill or lose their job.

However, controversy has been building up over the way in which the policies have been sold to consumers.

As a result of the rise in PPI complaints, disputes with insurers increased by 38%, while complaints about banking and credit rose by 30%.

More encouraging, however, was that grievances with regards to investments stayed at the same level as before, while motor insurance disputes decreased by 13%, and pension complaints fell by 27%.

FOS was introduced to help resolve individual complaints between consumers and businesses providing financial services, as a quicker and more informal alternative to the courts.

Although the business in question must have the chance to sort the problem out itself first, if the consumer remains unhappy, FOS has the power to step in to settle the dispute.

An independent and impartial organisation, the Ombudsman's service is free to consumers.

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