Putting Consumers First

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What is the real update on PPI pay back and provision?


In a recent Reuters interview Natalie Ceeney, the Chief Ombudsman at the Financial Ombudsman Service [FOS], confirmed that FOS is now receiving 2,000 new cases every working day compared with 3,000 at its peak six months ago. However, Ceeney was reluctant to predict future volumes stating, “Will it fall to 1,000 in six months? I just don’t know. The interesting thing about PPI is none of us know where it’s going to go.”

Predicting the future of PPI claims is difficult

The reluctance to predict the future of PPI claims is understandable as the figures suggest the end is not in sight. Only this week we saw one bank, Barclays, setting aside an extra £1.35 billion for PPI compensation which brings its total to nearly £4 billion. Lloyds Banking Group has provisioned £6.8 billion, but it is expected to increase those provisions when it reports its half-year results. Provisions generally, however, remain distressingly low compared to reality as current provisions remain at around £14 billion while many commentators (including The Bank of England) estimate that the final bill could rise to £25 billion.

Some Banks are not doing enough!

The July 2013 issue of the Ombudsman News shows that during the second quarter (April to June) 83% of new complaints were about PPI – up from 56% during the same period last year. Such a high level of complaints relating to one product is worrying in itself, but the fact that this category of complaints also receives the highest uphold rate in favour of the customer also shows something is continuing to go wrong. The proportion of complaints upheld in the consumers’ favour ranged from 1% (for complaints about SERPs) to 78% (for complaints about PPI).

Questions need to be asked as to why PPI uphold rates are out of sync with other product categories. Natalie Ceeney agrees stating within the Reuters interview, “We should be seeing uphold rates at 20 to 25 per cent because banks should know what they’re doing now. These are now so well-trodden. When customers do complain it should be handled properly,”

Take care on PPI complaint handling

All this means is that FOS are still being asked to do the job that banks should be doing and it is not surprising that Ceeney is critical of them stating, “Too many of the banks have not taken enough care on PPI complaint handling. Most of the big banks have outsourced it. The problem if you outsource is that you have to pay huge amounts of care to make sure your outsourcers are working to the right standards.”

What is the PFCA doing?

Although the PFCA is already working with some banks and other financial institutions to ensure that genuine claims are better identified and not referred to FOS it is clear that the behaviours of some financial institutions are still not focused on ‘putting consumers first’. The PFCA will not shirk from its responsibility to seek appropriate redress for those who deserve it and will continue to expose behaviours which cause consumer detriment as it continues to positively engage with banks who are taking the issues seriously…

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