Millions of customers are impatiently waiting to be compensated for PPI claims they have taken out. Many customers have already successfully filed claims against many of the banks, but have been waiting for their money for months. Other customers have had claims wrongly rejected by the banks. A recent study from the Financial Ombudsman Service found that more than 1,500 legitimate PPI claims are rejected every day.
FOS Burdened by Poor Claims Management
The banks are under a lot of pressure to reform their claims handling process. Customers must appeal to the Financial Ombudsman Service if they feel they have been wrongly rejected. The FOS has been receiving over 10,000 claims every week.
They reported that most of those claims were filed by people who had already had claims denied by the banks. The FOS has upheld approximately 78% of the claims that have been filed in recent months. The FOS said that the banks’ failed claims management practices are creating a huge workload for it. It has been forced to double its staff to handle all the mis sold PPI claims that customers are appealing.
Reasons Claims Are Denied
The FOS has grown increasingly frustrated with the way the banks have managed their claims. They are working with the FCA and other financial regulators to understand the problems so that they can come up with a solution. Why has the claims management process atrophied so much in the last couple of years.
Lack of Training
One of the problems they face is that many of the claims handlers don’t appear to be well trained. The Financial Conduct Authority said that the banks will need to train their employees how to handle claims better in the future. They need to understand how to use a PPI calculator and know which claims need to be upheld.
Third Party Contractors
Many banks have outsourced their claims handling process to other companies. Many of the contractors they hired were intentionally denying claims that they should have upheld. The biggest case came to light when a Times reporter revealed a scandal involving Deloitte and Barclays.
Some experts allege that many banks have intentionally denied claims to save money. They are facing £25 billion in losses due to claims that have been filed in the past few years. They appear to deny many claims hoping that customers won’t appeal to the FOS.
Banks Pressured to Reform Claims Handling
The banks are under increased pressure to reform their claims management practices. The FOS and financial regulators said that there are several reasons the banks have done such a poor job managing claims over the last couple of years.