Financial Ombudsman Service reject calls for customer charges

With millions of valid Payment Protection Insurance (PPI) claims being rejected by banks and lenders you would think that they would be focusing on getting their own house in order.

However, we are all aware that banks are driven by an insatiable appetite for greed and profit, with little regard for their customers.

We’ve estimated that banks have saved around £17 BILLION thanks to their tactics of rejecting valid PPI claims.

Once a PPI claim is rejected, the matter can be escalated to the Financial Ombudsman Service (FOS) who deal with disputes that cannot be resolved.

However, there is still a staggering number of customers who will accept a letter of rejection from their bank and not escalate the case to be independently investigated by the FOS.

Costs to lenders when a case is sent to the FOS

Once the FOS receive a complaint, they firstly complete checks to ensure the matter is something that they are able to investigate.

If it is, they initially contact the lender to advise them that they have received a complaint and that they intend to investigate it.

The lender then has the opportunity to change their stance, and in the case of a PPI claim, or Packaged Bank Account (PBA) claim, make an offer of compensation.

If the lender chooses to accept liability at this stage, the FOS do not charge a fee.

Should the lender choose not to change their stance, the FOS charge the lender a £550 fee for the cost of investigating the complaint.

Too lenient

Let’s get this right shall we….a lender can mis-sell PPI or a Packaged Bank Account in order to unfairly take money from their customers to boost profits.

A lender can then reject the valid PPI or PBA claim in the hope that the customer will accept the rejection and take it no further, thus saving the lender the cost of paying compensation for their wrongdoing.

In the event that the complaint is escalated to the FOS, the lender is then given a second chance, at no extra cost, to rectify their wrongdoing and make an offer of compensation.

Is it any wonder then that lenders are systematically rejecting valid complaints?!

Lenders want more!

As if the above isn’t bad enough, lenders have recently challenged the current setup, requesting that customers who escalate complaints to the FOS should be charged a fee of between £50 – £100.

Thankfully the FOS have rejected this latest request, stating that a free service to complainants underpins confidence in the financial services industry.

Things must change

Even though the FOS have made the correct decision when rejecting these latest calls from lenders, the current setup is still weighed far too heavily in the favour of the lender.

Why should lenders be allowed to get away with rejecting valid PPI cases, only to be allowed a second chance to do the right thing?

It’s no wonder that the majority of cases escalated to the FOS regarding PPI and PBA’s are found in favour of the consumer, as has been the case since the scandals first became apparent.

The only way to stop these abhorrent practices is to hit banks where it hurts.

The £550 fee needs to be charged to the lender regardless of whether they then choose to retract their wrongful rejection.

Furthermore, for every day that goes by where the FOS are overturning over 50% of complaints that are raised against a lender, that lender should be fined, and fined severely.

Only then will we start to see customers being treated fairly by lenders, as only then will it be in the interest of the lender.

Financial Ombudsman Service