The wait continues for the FSA’s review of FSCS silos
The latest FSA complaint statistics underline the runaway increase in the number of complaints about payment protection insurance (PPI) products.
The volume of PPI-related grievances jumped by 63% from 266,685 in the first six months of 2010 to 434,596 in the second half of the year. In the second half of 2009 – the first time PPI was split out from other products – the figure reported to the FSA was just 174,286. The number of non-PPI general insurance complaints increased by just over 10% to 260,021.
The FSA’s analysis suggests that grievances about PPI mis-selling have fuelled the jump in redress for general insurance and protection products, which was up 15% to £319m – by far the biggest chunk of the total £454m pan-financial services redress bill.
The dramatic rise in PPI mis-selling complaints has been the key factor behind the soaring cost of the Financial Services Compensation Scheme (FSCS) to brokers. It is this hike that Insurance Times’s Fair Fees campaign is seeking to curtail. Any complaints must be vetted by the firms themselves and the Financial Ombudsman Service before they land on the industry’s doorsteps in the form of increased FSCS levies. The rise in complaints indicates that the levy could soar even more.
Chairman of the all-party parliamentary group on insurance and financial services, Jonathan Evans, said: “This makes it essential that the FSA carries out its review of the way that the FSCS puts its silos together earlier rather than later.”
But, judging by last week’s all-party group, it does not appear that relief will come quickly from this quarter. FSCS chief executive Mark Neale was tight-lipped when pressed on the current status of negotiations between the European Commission and the UK government on the EU’s draft Insurance Guarantee Directive, which provides a framework for schemes like the FSCS.
The publication of the directive is the key factor delaying consultation on the FSCS’s future structure.