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Daily Insurance Industry News
Thursday 24th of May 2018
March 17, 2009

Financial Ombudsman Service awash with PPI complaints

by Gill Montia

Story link: Financial Ombudsman Service awash with PPI complaints

The Financial Ombudsman Service (FOS) has reported that it is dealing with over 800 complaints about payment protection insurance (PPI) each week.

The widespread mis-selling of the insurance, which is intended to cover loan repayments should a borrower become too ill to work or face redundancy, has already led the Financial Services Authority to ban the sale of single premium PPI alongside a loan, from May of this year.

During the 12 months to April 2008 the FOS recorded 10,652 complaints regarding the insurance, up from 1,832 during the previous 12 months.

There are over 12 million PPI policies in force in the UK and complaints now form around one-third of watchdog’s caseload, with around 90% of cases upheld.

In January, the FOS warned that changing economic circumstances could result in an increase in claims for PPI because a rise in redundancies would almost certainly reveal further instances of mis-selling.

At the time, chief ombudsman, Walter Merricks, warned that “single issue” consumer campaigns now dominate the FOS’s workload, saying he was keen to see changes that would allow single issues that directly affect large numbers of consumers to be resolved collectively.

In related news, LV= has reported that the proportion of claims settled by the insurer for income and critical illness protection insurance rose during 2008 resulting in total payments of over £45.9 million during the year.

The mutual attributes the increase to investment in its tele-interviewing facility and a rise in the number of proportionate claims being paid, in line with the new Association of British Insurers Code of Conduct.

According to LV=’s figures, the three leading causes of income protection claims during 2008 were as follows: mental health disorders 30%; musculoskeletal disorders 19% and circulatory system disorders 11%.

Meanwhile, the majority of critical illness claims related to cancer (57%).

 

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