LONDON (Reuters) - The number of complaints against British banks mis-selling payment protection insurance (PPI) doubled in the first half of 2012, according to the Financial Ombudsman Service, pointing to a further rise in the compensation bill for banks.
Britain’s banks have already set aside over 10 billion pounds ($16 billion) to compensate customers wrongly sold payment protection insurance alongside loans and mortgages in one of the worst consumer financial scandals in British history.
Policies were typically taken out alongside a personal loan or mortgage to cover repayments if customers fell ill or lost jobs, but they were often sold to people who would not have been eligible to claim.
The Financial Ombudsman Service, which deals with cases where banks and their customers cannot agree a settlement, said around 1,500 new cases were arriving every day. It went on to say many customers were now taking on the cases themselves without resorting to using claims management companies - which take a hefty chunk of payouts in return for doing the paperwork.
Complaints over PPI made up 63 percent of the 135,170 complaints the ombudsman received in total during the first half of 2012. PPI complaints rose to 85,562 from 49,419 in the second half of 2011.
Lloyds Chief Executive Antonio Horta-Osorio last week called for a radical change within the industry, saying banks needed to restore the trust of customers. Barclays new Chief Executive Anthony Jenkins, who was promoted from retail banking boss last month, has said cutting customer complaints is a priority.
Lloyds has set aside 4.3 billion pounds for compensating PPI mis-selling, far more than other banks. Barclays has set aside 1.3 billion pounds.
Policies were typically taken out alongside a personal loan or mortgage to cover repayments if customers fell ill or lost jobs, but they were often sold to people who would not have been eligible to claim. ($1 = 0.6246 British pounds)
Reporting by Matt Scuffham; Editing by Elaine Hardcastle