FOS hits out at claims management companies as PPI complaints rise 51%

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Customer complaints over motor and buildings cover fuelled a 31% rise in non-PPI general insurance complaints in the year ending March 31, the Financial Ombudsman Service’s annual review reveals today.

Within the non-PPI complaints, the FOS saw a 26% increase in motor insurance complains, a 31% increase in buildings insurance complaints, a 23% rise in disputes about contents insurance and a 55% increase in complaints involving critical illness insurance.

In terms of numbers, motor insurance complaints shot up to 7264 from 5,784; buildings rocketed to 4556 from 3469.

However, it added that the number of complaints relating to travel insurance fell by 4% and the number of extended warranty insurance complaints dropped by 2%.

FOS year-long complaints data breakdown to March 2012

PPI on the up

The FOS also said it saw a 51% rise in PPI complaints to 157,716 (2010/2011:104,597), following a 113% rise the previous year. “This is the largest number of complaints we have ever received in a year about a single financial product,” the review stated.

The FOS added that PPI complaints made up 60% of its total new workload during the year.

The FOS reported that the number of PPI cases referred to it by claims management companies had dropped to 69% of the total from 76% “as more companies realise they don’t need to pay someone to complain on their behalf”.

However, the figures didn’t stop the FOS hitting out at claims management companies’ practices.

“During the year we have again seen some claims-management companies taking a disappointingly lax approach to completing the questionnaire on behalf of consumers,” the review said. Where a form is completed inaccurately – or not at all – we may not be able to progress the complaint. We have made our position on this very clear to the claims-management companies in question – and we have required a number of them to withdraw their complaints and to re-complete the questionnaires again in full.”

It added that the level of information provided by claims management companies to support their clients’ cases continued to vary significantly.

“Some provide clear and cogent arguments on behalf of the consumer. Others simply make general allegations, some of which have no relevance to the individual dispute,” the review stated.

The FOS also said it continued to see a significant number of cases where, after investigation, it emerged there had been no PPI policy in place.

To read the FOS document click here