Natalie Ceeney, chief ombudsman at the Financial Ombudsman Service [FOS], was recently reported as suggesting that complaints about the mis-selling of insurance on loans and mortgages may have peaked. The suggestion comes on the back of a reduction in complaints landing in the FOS office from 3,000 each working day to around 2,000. However, it should be noted that the bulk of complaints that reach FOS are still PPI complaints; about two-thirds of their workload. To assess if complaints to FOS have really peaked one needs to assess the current position in respect of PPI mis-selling claims.
Where are we now, less than half way to £25b?
Let us not forget that it has been suggested that the final redress figure will be close to £25bn and that despite the fact that substantial sums have been paid out on a monthly basis the Financial Conduct Authority [FCA] numbers show that less than half this figure has been paid out so far.
On the basis that FOS are only meant to arbitrate on the cases which the parties cannot settle between themselves you would expect the number of cases referred to them to be falling as complainants and providers better understand previous decision precedents. So maybe the FOS statistics are not the correct ones to use in assessing whether PPI claims have generally peaked or not.
FCA shows a different story!
In fact, the FCA numbers show a completely different story. The FOS two thousand complaints per working day equates to around quarter of a million complaints every 6 months. However, the recently published FCA figures show that there were 1,786,626 new PPI “complaints opened” in the six months January 2013 to June 2013. That’s around 13,500 per working day! Although this is slightly lower than the previous two reporting periods it is still significantly higher than the historic number. So while more complaints may be settled without the assistance of FOS the volume of PPI complaints is not significantly declining and nor will it in the short term.
The missing billions – 5m more claims?
If the £25bn suggested total compensation bill is accurate and no one seems to dispute the figure and if, as appears to be correct, only half of it has been paid out so far this leaves another £12bn to be repaid. Research which I have undertaken show that an average PPI redress figure is around £2,400 per case, which means that there is some 5 million claims yet to surface.