Banks fobbing off PPI mis-selling complaints with 'goodwill' payments - Observer
Monday, February 02, 2009
Customers who reclaim mis-sold loan insurance from banks and other lenders are being warned not to accept "gesture" payments worth a fraction of their potential payout.
Nine out of 10 payment protection insurance (PPI) mis-selling claims rejected by lenders are now being upheld by consumer watchdog the Financial Ombudsman Service, up from a historical level of 40%. It says this is because borrowers have been "fobbed off" with less than they are entitled to.
The problem has become so acute officials at the FOS and City regulator the Financial Services Authority (FSA) are working together to resolve it.
The FOS estimates that, by the end of next month, it will have received a record 25,000 complaints about the mis-selling of PPI. These controversial policies, often expensive and designed to pay out to cover personal loans or credit card payments if you fall ill, suffer an accident or lose your job, have been dragged into the spotlight after customers found they did not qualify for a claim or did not realise they had been mis-sold the policies.
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