At different stages of the long-running payment protection insurance (PPI) mis-selling saga, the Financial Ombudsman Service (FOS) has consistently underestimated the number of complaints it is likely to receive about the sale of the product. In recent months, the Service’s predictions regarding PPI volumes have been more accurate, but now the organisation has revealed that it has underestimated the number of payday loan complaints for the current financial year – actual complaint volumes here are 45% higher than first expected.
The FOS believes that by the time the current financial year ends in March 2018, it will have received 4,500 more complaints than forecast concerning short-term lending (payday loans and instalment loans). The FOS now expects 14,500 complaints in this area, compared to the original forecast of 10,000. It also adds that six out of ten complaints it handles in this area are being upheld.
On the other hand, the FOS says it has overestimated the volume of packaged bank account complaints for the 2017/18 financial year by 2,500. The original PPI forecast of 180,000 new complaints in 2017/18 remains unchanged.
Unveiling its ‘plans and budget’ for 2018/19, the FOS says it expects to receive 410,000 complaints in the next financial year, and that more than half of these (250,000) will concern PPI, as the deadline for making a claim relating to this insurance draws closer. It also predicts 20,000 short-term lending complaints during the next financial year.
The report comments on the examples of irresponsible lending the FOS has seen from short-term lenders, commenting:
“Many people who contact us have taken out a number of loans over an extended period of time – during which, at some point, their borrowing became unsustainable. On average, the number of loans involved is into double figures – and we’ve seen complaints involving over 100 loans.”
Regarding PPI, the report comments on a recent fall in the proportion of complaints being upheld, saying that:
“In general, we’re upholding fewer PPI complaints than in previous years. This reflects the concerted effort we’ve made over the years to help financial businesses – as well as claims management companies, who are involved in a substantial proportion of the PPI complaints we receive – to understand what a fair outcome looks like, so they don’t refer complaints to us unnecessarily.”
The case fee has been frozen at £550 once again for 2018/19. This fee is paid by authorised firms on each complaint once they have had 25 or more cases referred to the FOS during the year, meaning of course that smaller firms usually don’t need to pay any case fees.
In her foreword to the plans & budget document, FOS chief executive and chief ombudsman Caroline Wayman notes that the sheer size of the PPI mis-selling scandal resulted in her organisation needing to treble in size, and she looks forward to reducing the size of the organisation’s operations once the PPI deadline has passed.
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.