PPI claims in hundreds each day, says ombudsman

PPI mis-selling has led to a huge industry in compensation claims

The financial ombudsman service is taking 1,500 new claims for payment protection insurance (PPI) compensation every day, figures show.

Complaints numbers have totalled 400,000, but remain only a "drop in the ocean" compared to all PPI complaints.

The ombudsman deals with cases that cannot be resolved between a consumer and financial institution.

It has found in favour of the consumer in seven out of every 10 cases it has dealt with.

Workload

PPI was sold along with loans and credit cards, wrongly in many cases, to cover repayments if people became ill or lost their jobs.

Banks are in the process of paying out £9bn in compensation to borrowers who were mis-sold PPI.

Many banks, building societies and consumer groups have criticised the claims industry.

Some claims management companies have encouraged people to claim, whether or not they were mis-sold a policy or even had one. Then they charge consumers a fee of 25% of any payment, plus VAT.

This has also increased the workload of the financial ombudsman. Inquiries about PPI have grown to 2,500 a day since the start of the year, the latest edition of Ombudsman News revealed.

However, only 5% to 10% of all PPI complaints ever make it to the ombudsman, the service said.

It has upheld complaints such as pressure sales, mis-selling, and sales when customers would not be eligible for the insurance anyway. These have led to £200m in compensation payments.