PPI complaints surge in first half

The number of complaints to the Financial Ombudsman Service (FOS) exploded during the first half of this year, largely fuelled by payment protection insurance cases, new figures show.

FOS received a total of 149,925 new complaints – an increase of 54% on the 97,237 cases received in the second half of 2010.

Around two third of the cases related to PPI with 93% of the total number of cases involving 157 financial businesses out of the more than 100,000 businesses covered by the ombudsman.

The high street banks continue to make up the lion’s share of PPI complaints, according to the figures, which include the first firm by firm breakdown of PPI complaints to be published by the FOS.

It shows that Lloyds TSB received the most gripes over its handling of PPI products (16,965), followed by Barclays with 12,862 and the Bank Scotland in third place (9,945).

Failed credit broker Welcome Financial Services was the subject of 1548 complaints.

FOS chief executive Natalie Ceeney said: “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.

“As a result, complaints in this period about PPI were harder fought, and harder to resolve - particularly if we found in favour of a consumer. This data therefore gives only a partial view on the cases which we were working to resolve over this period.”

One reason for the rise, the paper said, was the August 31 deadline for clearing the backlog of PPI claims. The claims had been put on while banks mounted a legal challenge against the claims, which they ultimately lost.