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ombudsman news

issue 92

February / March 2011

noting the numbers

In this issue we publish our latest set of complaints figures. These show how many new complaints we received - and what proportion we resolved in favour of consumers - during the third quarter of the current financial year (2010/2011).

The figures reveal some good news, in that complaint numbers in some categories are levelling off, or even starting to fall. However, things look very different as far as complaints about payment protection insurance (PPI) are concerned. Here, the numbers continue to rise - to the extent that these complaints now account for half of our workload.

Issues relating to PPI complaints formed a major theme of our plans and budget for 2011/2012, which we published last month and on which we are currently consulting. The feedback we have received to date has largely consisted of questions about how these PPI complaints may impact on our operations.

We have just spent a week in court as part of the judicial review on PPI complaints. This followed a legal challenge from the British Bankers Association (BBA) on behalf of a number of high-street banks, relating to the FSA's PPI complaints-handling guidance and to information on our own website.

We outlined in the last issue of ombudsman news (December 2010/ January 2011) how we thought PPI complaints might start having a significant impact on our operations, as a result of this legal challenge. Since then a number of major businesses are indeed now telling us they don't intend responding substantively to many of these complaints until a final outcome to the legal action is known.

Regrettably, this means that many thousands of consumers are now not getting straightforward answers from some businesses. The FSA has written to trade associations to express its formal concerns about poor practice by some businesses in handling these complaints. And, of course, this situation impacts on us with the increasing numbers of consumers referring their complaints to us.

We highlighted in our plans and budget for 2011/2012 the kind of operational challenges we expect to face if the uncertainty caused by the BBA's judicial review action is not resolved - and if the volume of cases continues to grow at (or even to exceed) the unprecedented high levels seen in recent months. Since the judicial review, for example, we have been receiving up to 4,500 PPI cases a week.

The sheer volume of these new PPI complaints - and the lack of meaningful cooperation from some businesses - is making it difficult for us to progress all these cases as rapidly as we would like. It is because of the operational risks and challenges these problems present - as we plan to deal with significant shifts in demand for our service - that we are consulting on building up our financial reserves. We are working closely with the FSA on how this will impact on the levy paid by the businesses it regulates. The FSA is currently consulting on this as part of its proposed annual funding requirement.

Natalie Ceeney
chief executive and chief ombudsman

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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.