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ombudsman news

issue 65

October/November 2007

ask ombudsman news

payment protection disputes

With payment protection insurance under scrutiny from the media, regulators and consumer groups, is the ombudsman seeing more complaints about this type of insurance-

a money adviser

Yes. Last year saw a 39% increase in the number of disputes referred to us about payment protection insurance (sometimes called "loan protection" or "PPI"). And it looks as though this year the number of disputes we deal with involving these policies could double - to over 4,000 cases.

Broadly, we see three types of complaint involving loan protection insurance. The first is where a claim on a payment protection policy is turned down. In other words, the consumer has bought a policy and made a claim on it - but the insurer says it is entitled to reject the claim under the terms of the policy.

The second type of complaint we see involves payment protection policies that may have been "mis-sold". This might be the case if, for example, a consumer did not realise they were taking out a policy that they did not actually want; or if the policy was not properly described to the consumer.

The third type of problem involves disputes about refunds of premiums - where the consumer has paid for a payment protection policy with an up-front single premium (which is frequently added to the loan). If the consumer pays off the loan early, only a small refund may be available - and this can give rise to complaints.

Our factsheet on payment protection insurance, one of our series of consumer factsheets, gives more information about the issues which crop up most frequently in the disputes we see involving this type of insurance.

missing the post

Luckily - during the recent postal strike - my firm didn't need to send any of our clients a final response letter to a complaint. I guess we could have made sure we met the 8-week deadline for sending out the letter by emailing it to the client. But we'd not have been able to send your consumer leaflet that needs to accompany the letter.

In case the postal strikes return in the coming months, I'd appreciate knowing whether the Financial Ombudsman Service would allow us to email an electronic version of the leaflet to customers, followed up by a hard copy when the post resumes.

a consumer advice agency manager

In exceptional circumstances, where the postal service is seriously disrupted and you need to send a customer a final response letter by email, you might like to consider emailing them a link to the following page of our website [ consumer-leaflet.htm].

In order to meet the regulatory requirements you would, of course, need to follow this up by sending the customer a hard copy version of our consumer leaflet, your complaint and the ombudsman, as soon as the postal service resumed.

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ombudsman news issue 65 [PDF format]

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.