The spectre of the biggest financial mis-selling scandal in the industry’s history doesn’t look like going away any time soon.
Millions of customers have now realised that for years banks have made a killing from selling expensive Payment Protection Insurance to people taking out loans – whether or not it was appropriate.
It became so profitable for banks to sell PPI – which will cover your repayments for a year in the event of an accident, sickness or unemployment – that many customers ended up paying for it without even realising.
Others were sold insurance they didn’t need or couldn’t use, but which still ended up costing them thousands of pounds.
Now the regulators have woken up to this scandal, which dates right back into the 1990s, and the banks were forced to put aside billions of pounds to cover the cost of compensation to thousands of customers after abandoning a legal challenge in the High Court.
Earlier this year Streetwise provided readers with a checklist to help them work out whether they have been on the receiving end of this gross mis-selling.
But we are still receiving calls from those of you who aren’t happy, and the latest figures from the Financial Services Authority show that in many cases the industry is failing in its attempts to resolve people’s complaints.
Independent consumer watchdog Which? has led the fight for compensation for those affected, but executive director Richard Lloyd says banks still aren’t treating customers fairly.
He says: ‘If the next round of complaints data doesn’t show a dramatic improvement then the FSA must take tough enforcement action against banks whose complaints handling isn’t up to scratch.
‘To ensure that consumers get the redress they deserve the FSA must make sure that all major banking groups are required to review the PPI complaints they previously rejected unfairly.
‘Even if you take PPI out of the equation, these figures point to the blasé attitude banks seem to have towards their customers.
‘In a properly functioning market banks wouldn’t be able to get away with treating customers like this.’
The figures show what percentage of complaints the regulator resolved in favour of the customer, because the bank was not willing to take sufficient action.
Of the big four retail banks, Lloyds TSB has the worst complaint record, with 84 per cent over the last six months being settled against them.
Royal Bank of Scotland and Barclays occupy the middle ground, with scores of 55 per cent and 52 per cent respectively.
But far ahead of the others – for this period at least – is HSBC, with a much more respectable 18 per cent of cases ruled against it.
Natalie Ceeney, chief executive of the FSA, puts the statistics into context when she says: ‘These latest figures show a significant increase in the number of new PPI complaints referred to the ombudsman during the first half of 2011.
‘This period coincided with the time when most of the high street banks and some other financial businesses had put PPI complaints on hold, because of their legal challenge against the ombudsman service and FSA.’
And News consumer rights expert Richard Thomson echoes the view of Which? that banks aren’t doing enough to sort the problem out.
He said: ‘The banks have been lumped with hefty fines by the regulator, withdrew from a High Court test case they had in the pipeline to try to avoid compensating consumers for mis-selling, and have been compelled to make provision of billions of pounds for compensation, which has dented their profits for last year.
‘Anyone trying to claim compensation should bear these two tips in mind:
‘Don’t use compensation claims companies because it’s an absolute doddle to do it yourself.
‘Be sure to claim the total due, and not be fobbed off with a bank/insurer’s offer of settlement.’
For help generating a letter of complaint, visit the Which? website at which.co.uk.