PPI Complaints Hit 2m in 2019

Surge in complaints to the regulator over PPI mis-selling ahead of the August 29 deadline, with many banks struggling to cope with high levels of complaints

James Gard 17 October, 2019 | 11:49AM
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PPI complaints made up nearly half of the complaints made to the FCA in the first half of this year, according to the latest data from the regulator.

The Financial Conduct Authority said that year on year, the number of complaints about PPI rose from 1.58 million to 2.12 million, a 34% increase – and this does not cover the period of the PPI deadline, which saw a rush of last-minute rush of applications. Out of 4.29 million complaints received by the regulator in the first six months of the year, 49% or 2.1 million, related to Payment Protection Insurance mis-selling.

In total, some £2 billion was paid out in redress relating to PPI complaints in the first six months of the year, with an average of £1,890 paid out per complaint. 

Nearly two months since the final deadline for PPI passed, many claimants are still awaiting a response. The regulator has said that because of the spike in claims up to and including the August 29 deadline, some people may not have a final decision from their banks until next summer.

Under the standard PPI claim rules, if your bank or building society has not replied to you within 8 weeks – or if it rejects your claim – you can take this up with the Financial Ombudsman Service (FOS). This would mean a claimant would expect to hear by October 24.

But the FOS is now saying customers should wait before referring any cases to it because of the high volumes being dealt with.

The FCA itself is challenging banks to deal with complaints “as quickly as is reasonable, given the very large volumes”. Still, it insisted that any delay will not affect customers financially as interest will be added to the claim that includes the length of time it took the bank to respond.

Many of the high street banks are due to report third-quarter earnings in the coming weeks, but many have pre-empted these updates by warning of longer response time and higher compensation claims.

Banks Deluged 

Barclays said in early September it had received a significantly higher than expected volume of PPI-related claims in August, and a further spike on deadline day. It is increasing its provision for PPI claims by between £1.2 billion and £1.6 billion for the third quarter.

Lloyds, which has paid out the most of high street banks so far, received 600,000 to 800,000 PPI “information requests” every week in the final month before the deadline – this is when an individual contacts the bank to check if they had PPI with Lloyds, rather than submitting an official complaint.

Lloyds said in a September update that the quality of these applications had been low, suggesting that many were speculative enquiries which are likely to fail. Indeed, the uphold rate has already fallen across the board. According to the FCA data, some 54% of PPI complaints were upheld in the first half of this year, down from 63% in the second half of 2018. 

CYBG, which owns Yorkshire Bank and Virgin Money UK, also saw a deluge of complaints in the run-up to August – it received eight months' of information requests in August, around 340,000.

Nationwide also received a high level of complaints and is putting aside between £20 million and £50 million extra to cover further complaints.

RBS is asking customers to show patience as it sifts through the “exceptional volumes” of complaints in the run-up to the deadline. The bank is expecting to set aside between £600 million and £900 million in extra charges in the third quarter. Results for that period are due on October 24, and the bank said it would not comment before then.

Co-operative Bank says it will take several months to work through the applications received in August – “The Bank expects to reflect a more accurate figure in its Q3 trading update but it is likely that the majority of processing will not be completed until H1 2020.”

HSBC have not yet provided an update to the market on PPI claims since the August 29 but have been approached for comment by Morningstar.

Non-PPI Complaints

The Financial Conduct Authority received a staggering 4.29 million complaints in the first half of the year. 

Almost half related to Payment Protection Insurance – in fact, with PPI stripped out, the number of complaints received in the first six months actually decreased from 2.32 million in the second half of 2018 to 2.18 million.

Aside from PPI, the most complained about products were current accounts, credit cards and motor and transport insurance. Investment products received an average of 2.1 complaints per 1,000 client accounts.

The number of complaints relating to crowdfunding and peer-to-peer investments more than doubled from 906 in the first half of 2018, to 1,883 in the first half of 2019.

Investment bonds received 8,932 complaints – up from 7,338 a year ago, investment trusts 784, down from 878, and unit trusts 5,138, down from 5,701.

Some 19,104 complaints were made about investment Isas, up from 18,432, while the number of complaints made about platforms fell significantly, from 12,510 in the first half of 2018 to 9,684 in the same period this year.

Redress paid to investment-related complaints totalled a hefty £35.8 million in the first half of the year, up from £27.5 million in the same period a year ago. That compares with an eye-watering £2 billion paid out for PPI-related complaints in the first six months.

The FCA said 94% of complaints made were closed within 8 weeks, excluding those relating to PPI, with 57% of these upheld.

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James Gard

James Gard  is senior editor for Morningstar.co.uk


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