Complaints jump as banks accused again over PPI issues

The mediation body received 149,925 complaints about financial businesses in the first half of this year, it reported yesterday, up 54 per cent from the previous six months. Taxpayer-backed Lloyds Banking Group, the UK’s biggest lender, was responsible for the highest number of complaints, at more than 37,000. Edinburgh-based Royal Bank of Scotland, also part-owned by the state, accounted for 13,391 complaints.

Almost two thirds of complaints to the FOS concerned payment protection insurance (PPI). However, most high street banks put complaints about PPI on hold until May, pending a doomed high court challenge against Financial Services Authority (FSA) rules forcing them to reopen sales dating back to 2005.

Natalie Ceeney, chief executive of the FOS, said: “As a result, complaints in this period about PPI were harder fought, and harder to resolve – particularly if we found in favour of a consumer. This data therefore gives only a partial view on the cases which we were working to resolve over this period.”

But consumer groups claimed the figures offered further evidence that banks are failing to treat PPI complaints fairly.

Richard Lloyd, executive director at Which?, said: “If the next round of complaints data doesn’t show a dramatic improvement then the FSA must take tough enforcement action against banks whose complaints handling isn’t up to scratch.”

More than half of PPI complaints were upheld in favour of the consumer, including 84 per cent at Lloyds TSB, compared with the 47 per cent upheld across all products.

Oliver Morgans, of Consumer Focus, said the PPI uphold rate was unacceptable. “Even the seemingly better performers appear to be unnecessarily stringing out complaints, challenging decisions and denying consumers compensation. All in all, the banks should be ashamed at their continuing failure to tackle the PPI issue.”