Payment protection insurance complaints represented a massive 78 per cent of all claims to the ombudsman in the past financial year and now staggeringly account for close to half of all complaints it has ever received, despite only coming to light as a major scandal in 2006.
Since the Financial Ombudsman Service was set up in 2000, consumers have referred a total of almost 2.5m cases, of which 61 per cent have involved just three issues: mortgage endowments, bank and credit card charges and PPI.
In April 2013 the service said it received its two millionth case; six months later it received its millionth PPI complaint. As of the end of the 2013/2014 financial year, a total of 46 per cent of all claims in its history were accounted for by the product.
The first ever mis-selling fine for PPI emerged in 2006, with claims volumes picking up markedly over the past five years and especially since banks began making major redress provisions since around 2011.
Of the almost 400,000 PPI claims brought in the past 12 months - nearly four-fifths of the record case load of half a million complaints - 72 per cent were brought by claims management companies, compared to 57 per cent during the previous year.
The ombudsman described it as “disappointing” that the proportion of complaints brought by CMCs increased during 2013/2014.
It also cited that in other product areas CMCs are a very marginal source of claims, with three-quarters brought by consumers themselves. Only 1 per cent of credit card complaints and 2 per cent of other types of complaint, including investments and mortgages, were brought by CMCs.
Ten claims management companies accounted for 40 per cent of the cases the Fos handled during the year, and the other 60 per cent of cases involved involved around 500 other claims-management companies.
The Fos also said that it sometimes has to explain to consumers that it cannot look into complaints about CMC. It added the Ministry of Justice has confirmed that this will become the responsibility of the Legal Ombudsman “at some point during 2014”.
The review said: “We work closely with the claims-management regulator, part of the Ministry of Justice, and we pass information onto them about poor practice we are seeing in the sector.”
As reported yesterday, one area which has seen a jump in complaints is small self administered schemes and self invested pensions. This has almost doubled in the past year, with a total of 1,039 complaints at the end of March 2014 compared to 697 a year earlier.
Almost three quarters of the complaints stem from advice to invest life savings into unregulated and unsuitable investments. The Fos upheld 63 per cent of complaints.
