New figures from The Financial Ombudsman Service show that March 2010 to March 2011 saw the highest ever level of complaints.
Over a million people made use of the free service, which is designed to help settle disputes between financial providers and customers, to log a complaint regarding a financial service. Around 200,000 of these followed their complaint to a formal procedure.
The majority of complaints made last year were related to the mis-selling of payment protection insurance (PPI) against loans, which saw several lenders like A&L and HFC Bank receiving huge fines.
PPI is a form of insurance that is designed to help you with your repayments in the event of you being unable to pay-up as a result of an accident or sickness that leads to unemployment.This affected millions of customers across the UK and the advice being given out by some industry experts is that if you have a loan, check whether it included insurance. If so, you might be paying out thousands of pounds for a potentially useless insurance policy without even knowing about it.
The ombudsman is expecting PPI to take up most of its case load for several years to come, as banks face an influx of claims from customers that paid for the controversial loan cover.
Higher regulations in the insurance industry mean that you aren’t as likely to have been affected if you took out a loan in the last couple of years. However, if this scenario sounds familiar then you might find you can claim back unnecessary costs:
You took out a £5k loan over a five year period at a low rate of 7%. The lender offers you a ‘fully protected’ loan and quotes you a repayment plan of £125 a month. The catch is that most people will trust that this payment plan adds up, but if you do the maths you will see that you could have made some savings – and are in fact paying £25 extra per month – which is where the fully protected part comes in, as this covers the expensive insurance that you have been paying for.
Now multiply the £25 for the duration of the loan and you will quickly see that as well as the £950 you paid in interest charges, you also paid out an insulting £1,500 on an insurance policy that you probably never even needed.
The good news is that you could be entitled to a refund, so if you think you might have been a victim of PPI mis-selling, write to your lender. Something to note is that very complaints successfully result in a payout on the first attempt – persevere, and you have a good chance of winning our case.
By Sam Gooch