Customer plaints against UK banks reach record high
15 Sep 2010
A record number of customers in the UK have complained about banks this year, mainly about the mis-selling of payment protection insurance (PPI), which threatens to become one of Britain's worst personal finance scandals. Tens of thousands of legitimate complaints are being fobbed off and ignored by high street banks.
Damning figures were released by independent disputes arbitrator the Financial Ombudsman Service (FOS) on Tuesday. The service has received 84,212 new complaints about financial providers between January and June, up 3 per cent on the final six months of last year.
Sold to cover loan payments, PPI was the single most complained about problem, generating 30,000 new cases, three times more than the combined totals for mortgages, investments, and pensions.
Britain's five biggest banking groups – Lloyds, Royal Bank of Scotland, HSBC, Barclays and Santander – attracted 47,507 complaints, of which 40 per cent were about general insurance, the category which includes PPI. The insurance covers default on mortgages, loans and credit cards, but is riddled with exemptions which make it hard to claim.
Lloyds Bank was the most complained about institution. In July, Lloyds became the first banking group to stop selling PPI. A spokeswoman for Lloyds, which is 43 per cent owned by the taxpayer, denied that its performance was poor.
She said, "The vast majority of our customers are happy with the service we provide and this is reflected in the low number of complaints we receive relative to the high number of accounts our customers hold."
The Financial Services Authority expects 2.75 million complaints about PPI to hit banks in the five years to 2015, with compensation to customers potentially topping £4 billion. The number of new cases, 81 per cent of which are upheld by the FOS, means PPI could eventually match the mis-selling scandals of the 1990s, when banks had to pay out up to £8 billion for wrongly transferring workers out of occupational pensions and £1 billion for touting underperforming endowment policies.
