Banks Found To Be Turning Away Thousands Of Legitimate Payment Protection Claims

Online, September 26, 2013 (Newswire.com) - As part of the payment protection insurance claims handling process, it is possible for either the borrower or the bank to refer complaints to the Financial Ombudsman Service for resolution and to determine whether compensation is due to the borrower. This is meant as a last resort and a final step when all other avenues have been fully explored but recent figures show that the banks are turning a large portion of perfectly legitimate complaints straight over to the FOS, who ultimately uphold the complaints in favour of the borrower.

The Financial Ombudsman has said that they saw a record number of financial complaints in the first six months of this year and that it was because of the mis-selling and poor handling of payment protection complaints by consumers against the banks and other lenders. More than a quarter of a million complaints were received during the period all relating to the payment insurance scandal. More than 80% of these complaints were upheld in favour of the borrower and the FOS has said that banks should be doing more.

Banks and lenders have been told by the FOS that they must deal with complaints and questions regarding payment insurance quickly and properly. Such complaints should be handled efficiently so that people legitimately owed money receive their compensation as soon as possible. Many of the banks have taken on thousands of employees, including contract workers, to handle and manage the complaints, but this doesn't seem to have been enough to have quelled the tide of complaints to the FOS.

Consumers are typically encouraged to deal with the bank or lender directly in the first instance. The process usually requires that a standard letter be sent, although some lenders do offer their own forms and their own complaints procedure to be followed. Where the lenders reject applications, consumers then have the right and the ability to be able to approach the Financial Ombudsman and ask for a review of their payment protection claims.

The number of complaints received by the Ombudsman regarding payment protection claims is a sign that banks are failing to meet with the requirements set out by the FOS and it is consumers, who have already been wronged by the lenders, that will ultimately suffer. While the FOS itself has taken on a thousand workers to help deal with the extraordinary case load, they are still buckling under the pressure and this means that complaints received by the regulatory body can take time to resolve.

A number of banks and lenders have been fined for their conduct in handling payment protection claims and there are investigations under way into a number of banks and how they are indeed dealing with the complaints. Regulators have the power to sanction additional fines on lenders and as they have already done so on a number of occasions, this is clear evidence that they will do so again in the future if they deem it to be necessary.