Complaints made to the Financial Ombudsman Service have been buoyed by media campaigns about specific issues such as mortgage payment protection insurance, Fos revealed.
Prior to Christmas, the Fos reported a surge in single-issue complaints that had become a significant part of its workload, with complaints about PPI accounting for 25,000 consumer grievances in the last 12 months. Walter Merricks, chief ombudsman for the Fos, said the ombudsman wanted the industry to adopt collective remedies to deal with such issues.
If the industry failed to take a collective stance, Mr Merricks said the ombudsman service was forced into a role that made it act almost like a regulator. Mr Merricks said: “Of course, the ideal solution would be for all financial businesses to treat their customers fairly, and to put things right when they go wrong, either because businesses recognise this is the right thing to do, or because of effective regulatory scrutiny.
“Where this does not happen, and a single issue arises that directly affects very large numbers of consumers, it would surely best be resolved collectively, rather than relying on individual consumers each having to make their own separate complaint. “If there has been widespread consumer detriment, widespread redress is needed.”
Mr Merricks said as things stood, the ombudsman service would continue to be faced with mass surges of single-issue complaints that it would have no option but to deal with on a case by case basis. He said: “The actions we necessarily have to take, in order to address the complaints, may result in our being accused of acting as a surrogate regulator, but that may be inescapable.”
During a Treasury select committee into the work of the FSA conducted in December, Hector Sants, chief executive of the FSA, admitted progress made by firms in sorting out the issue of PPI had been disappointing.
He said: “We do agree that firms altering their behaviour has been slow.” PPI is currently the subject of an investigation by the Competition Commission, which has published provisional findings on the sale of retail PPI. One of the Commission’s proposals was to ban the sale of single-premium PPI policies.
Sara-Ann Burgess, managing director of Essex-based mortgage payment protection insurance intermediary Burgesses, said: “Let us face it, firms that are eager to continue to sell single-premium policies are not good firms. “They want to continue to be able to sell it because it rakes in so much money for them and since it is tied to the repayment of the loan, they are guaranteed premium income.”
Source: FT Adviser
Huntswood