The Financial Ombudsman Service is to hire 1,000 extra staff to handle the “unprecedented” deluge of complaints over the payment protection insurance (PPI) mis-selling scandal, as it receives 5,000 new PPI cases a week.
PPI was an insurance product routinely mis-sold by lenders to cover loan and credit card repayments, resulting in a tidal wave of complaints to the Ombudsman from consumers who cannot agree a settlement with their banks and other financial service companies.
The Ombudsman expects to receive 250,000 new PPI cases by the end of the current financial year way above the 165,000 cases it had anticipated. The volume is expected to drive the total cases it handles this year to 375,000, a 45pc rise, according to its latest budget plan .
The planned staff increase comes after the Ombudsman last year took on 1,000 new staff to cope with its workload, taking its headcount to 2,500.
Tony Boorman, deputy chief ombudsman, said firms frustrating complaining customers with “delays and inconvenience” was having a “marked impact on our workload”.
“Two years after the court ruling confirmed the approach that financial businesses should take handling PPI complaints, it’s disappointing that we’re still seeing significant numbers of unresolved disputes about mis-sold policies being referred to us,” he said.
Last week, the Financial Services Authority fined the Co-operative Bank £113,300 after it delayed the handling of valid PPI complaints between January and May 2011 “for no good reason”.
The Ombudsman also said the bigger-than-expected case flow due to the PPI scandal had led to substantial extra costs, leaving it poised to end the year with a £21m financial deficit. As a consequence, it is raising the fees it charges financial services firms in cases which are referred to the service by £50 to £550.
The industry has put aside more than £12bn to compensate customers over PPI, but some believe the final cost could pass £25bn.
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