Complaints tailing off over payment protection

People were mis-sold PPI which drove up the number of complaints made about banking services.
People were mis-sold PPI which drove up the number of complaints made about banking services.
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New figures show a sharp fall in the number of customer complaints made to banks in recent months.

Consumer complaints to banks about their products and services fell by half a million in the first six months of this year, compared to the last six months of 2012.

Overall, 2.9 million customer gripes were recorded between January and June, down from 3.4 million in the previous six months, according to new figures released by City regulator the Financial Conduct Authority (FCA).

Driving this decrease was the first-drop off in complaints about payment protection insurance (PPI) seen in three years – although it has now dealt with one million such cases, and is still seeing up to 10,000 PPI complaints a week.

PPI was sold to people to help them cover their loan payments after a loss of income, for example if they fell ill or lost their employment.

But a widespread mis-selling scandal later emerged, with some people finding they had taken out the insurance without realising it or saying they felt under pressure to do so.

Consumer group Which? estimates that people have collectively paid more than £50bn for PPI policies over the last 16 years, although of course not all of them were mis-sold.

The size of the scandal escalated beyond expectations, and so far banks have put more than £18bn aside to compensate customers who were mis-sold the insurance - that’s around double the cost of the London 2012 Olympic Games.

But now it seems as though the PPI mis-selling storm may be starting to die down.

Just under 1.8 million new PPI cases were opened in the first half of 2013.

While this is still a large number, it marks a drop of almost one fifth (18 per cent) from the peak of 2.2 million complaints received in the previous six months.

Until the release of the latest figures, complaints made to financial firms about PPI had been steadily rising each half-year since around 2010.

Ian McConnell, a financial services partner at the firm PwC, says the fall in complaints indicates the industry is getting on top of its issues.

Mr McConnell said: “This is a good outcome for customers as well as banks. It demonstrates the number of customers with concerns is reducing, albeit from a significant base.

“In particular the numbers would suggest the back of the PPI issue has been broken and is now on a downward trend with banks getting through complaints more efficiently.”

The FCA’s figures also show that banks are clearing up complaints generally at the fastest rate since similar records began.

Nine out of 10 of complaints made to financial services firms were dealt with within eight weeks, marking the highest proportion seen since records began seven years ago.

For their part, banks have promised there will be no return to the bad practice and mis-selling scandals of the past.

The British Bankers Association (BBA) has said the figures are “encouraging”.

A spokesman for the BBA said: “Banks continue to improve their products and services, and have placed their customers at the centre of everything they do.

“Staff are now rewarded for high levels of customer service and not sales volumes.”

So, while high levels of PPI complaints continue to be received, it looks as though there is finally a chink of light at the end of the tunnel.

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