Ombudsman in difficulty as the rate of PPI claims doubles

 
City A.M. Reporter
OFFICIALS tasked with judging rejected PPI misselling claims received 10,000 new complaints a week in the final quarter of 2012, the Financial Ombudsman Service (FOS) reported yesterday, double the rate seen in the previous three-month period.

The continued boom in claims means the FOS expects to receive over 350,000 complaints by the end of the financial year, double its original forecast of 165,000.

The agency took on an extra 1,000 workers to deal with the flood, but it cannot keep up with the pace and has a backlog of approximately 250,000 cases to deal with.

The four biggest banks have already set aside more than £12bn to repay customers who were wrongly sold the payment protection insurance, but the increasing flow of claims to the FOS suggests this will only increase further in the coming results season.

Banks will also find out this week how they will have to deal with interest rate swap misselling claims from firms.

Hundreds of millions of pounds have been set aside to repay complaining firms.

The Financial Services Authority is expected to lay out new guidelines to differentiate between sophisticated firms who knew what they were buying, and small firms who lacked the ability to understand the products.