Watchdog concerned about rise in financial complaints
COMPLAINTS FROM consumers about the possible misselling of controversial payment protection insurance (PPI) policies sold by Irish banks in recent years have almost doubled since the beginning of the year, the latest report from the Financial Services Ombudsman (FSO) shows.
The report, published this morning, also reveals that the number of general complaints being made to the FSO against financial institutions increased in 2012, an upward trend which was described as a “serious concern” by ombudsman Bill Prasifka. He said it indicated a deterioration in complaint-handling by the financial institutions.
In all, 3,668 new complaints against financial institutions were received by Mr Prafiska’s office in first half of 2012, up 5 per cent on the previous six months. The report also shows an increase in complaints upheld by the FSO.
Forty per cent of complaints against banks related to mortgages, with tracker rate issues, maladministration and repayments terms the main areas of complaint
Complaints about payment protection insurance increased “dramatically”, from 218 to 410. The reports said 74 per cent of complaints focused on what consumers believed was the missale of such products.
PPI schemes promise to clear outstanding debts on credit cards or other loans should a borrower fall sick or lose their job. About 340,000 were sold here from August 2007 to November 2011, with more than 80 per cent sold through banks and credit institutions.
This summer, seven leading financial institutions were ordered by the Central Bank to carry out “comprehensive reviews” of their PPI sales over the last five years amid growing concerns that tens of thousands of consumers were missold such products for almost a decade.
“The alleged misselling of PPI products has resulted in a doubling of PPI complaints in six months and trends suggest this increase will continue,” Mr Prasifka said. The report suggested the rise was down to increased awareness of the issue and “continuing economic difficulties” faced by consumers.
The ombudsman said the level of complaints received across the board were “of serious concern” and suggested they showed institutions were “still not doing enough to engage with consumers at an earlier stage”.
Of the complaints received by Mr Prasifka’s office in the first half of the year, 1,889 had to do with insurance, 1,283 had to do with banking and the remainder were about investment products.
While there is growing concern within the FSO about the increase in complaints, the report also shows that 72 per cent of consumer concerns were not upheld, compared with 74 per cent in the previous six months. The percentage of cases upheld fell to 11 per cent, from 12 per cent, but the percentage of cases partially upheld rose three points, to 17 per cent.