With only days left before the payment protection insurance claims deadline, the Financial Ombudsman Service (FOS) chief executive has urged consumers who may have taken out this insurance in the past to “hurry up and claim”. More than £36million in compensation has already been paid by banks and other firms, and with a last-minute surge in complaints expected, the final bill could top £40 billion. The cost of the scandal is already well in excess of £40 billion when the cost of recruiting extra staff to process the complaints is taken into account.

Two of the biggest banking groups have claimed that there has been a decline in the ‘quality’ of claims as the deadline approaches, with many of the complaints coming from people who had never been customers of the bank. However, FOS chief executive Caroline Wayman said that she would not criticise consumers for making enquiries as to whether they may have had PPI with the bank, especially as many people were sold PPI without their knowledge.

Most banks are understood to be treating an enquiry about whether a PPI policy exists as a complaint, without requiring the customer to make contact again and explicitly state they want to complain about their policy.

The FOS currently has more than 1,000 staff dealing with PPI complaints, out of a total workforce of 3,800. The Service has already published its proposals for a post-PPI world, but its PPI staff will be required for a while longer, as after the August 29 deadline the firm will have eight weeks to investigate the complaint and issue its final response, then the customer will have six months from the date of the final response to decide if they wish to refer the matter to FOS.

Ms Wayman also revealed that she is seeing complaints from some customers with around 100 loans, and others with around 10-15 loans, raising questions as to whether the lender carried out sufficient credit and affordability checks. FOS demand that lenders carry out a more rigorous assessment for repeat borrowing applications. Lenders should also note that if FOS sees a pattern of needing to take out payday loans each month then they are likely to conclude that the borrower is taking these loans to meet essential expenses and that therefore the customer would not be able to afford repayments on a new loan. Firms need to think carefully before approving a loan application for someone whose credit record shows a reliance on short-term borrowing.

Firms are advised to regularly check the Ombudsman Decisions page on the FOS website and to look at the reasons why firms in their sector are having complaints upheld.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article