Ombudsman says 3,000 new complaints a week put FOS budget under pressure
The volume of complaints to the Financial Ombudsman Service about payment protection insurance (PPI) has had a dramatic resurgence, sparking a warning from the FOS’s chief executive that its budget may have to be increased.
According to the latest ombudsman’s newsletter, published this week, the service is receiving around 3,000 new complaints a week.
In her foreword to the newsletter, chief ombudsman Natalie Ceeney wrote that the number has “climbed steeply from 1,000 a week”, adding: “This means we’ll soon be getting our 300,000th PPI complaint. These numbers are pretty unsettling for us.”
An FOS spokesman said that the organisation was looking at a levy hike. “We are going to have to do something to make sure that we have enough resources. We have to consider everything.”
Ceeney added that around 80% of new PPI cases were being referred by claims management companies.
The news of the spike comes just over a month after the FOS reported that the number of fresh PPI cases had fallen to 19,259 in the third quarter from 56,025 in the second.
Responding to the figures, Biba head of compliance and training Steve White said the volatility of the complaint volumes meant that it was hard for the FOS to set its budget and staff numbers to handle them.
The explosion of PPI mis-selling claims accounts for recent increases in the Financial Services Compensation Scheme levy on general insurance brokers, which the Insurance Times Fair Fees campaign aims to reform.
Pass notes: PPI mis-selling
Why has the volume of complaints increased again?
One explanation may be that an FSA waiver, allowing firms more weeks to deal with PPI complaints, expired in August, as a result of which they now have less time to deal with them.
Why should brokers be worried?
Past mis-selling scandals indicate that there is a two-year lag between the peak in the number of complaints to the Financial Ombudsman Service and the Financial Services Compensation Scheme. This suggests that the longer the FOS is dealing with a large number of PPI cases, the longer the agony will go on for brokers.