Loan Insurance Tops Complaints List to Financial Ombudsman Service

Mon, 24 May 2010

The financial ombudsman service has revealed that the controversial payment protection insurance (PPI) topped its list of complaints during 2009-10. The service’s annual report reveals that one in three new complaints made to the service last year concerned PPI, while there was a 46 per cent increase in the number of finance cases handled by ombudsmen last year.

Nearly 50,000 new complaints were made about PPI last year, while the service succeeded in resolving a record 166,321 disputes last year. Consumers received compensation in half of these cases, while the service received nearly 1 million enquiries in total.

Payment protection insurance has proved extremely controversial in recent years, with the Competition Commission recently affirming its intention to ban the sale of insurance alongside loans or other forms of credit, despite the protestations of banks . Banks have enjoyed huge profit margins on the sale of PPI, helping them to offer deceptively low interest rates on personal loans and credit cards .

Current accounts provided another source of contention during the last financial year, accounting for 15.5 per cent of complaints, while a further 11 per cent of complaints pertained to credit cards, 4.5 per cent concerned mortgages and 4 per cent were about unsecured loans .
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