21 February 2007
Financial research analyst Defaqto has predicted that thousands of consumers will be eligible to claim that payment protection insurance (PPI) policies were mis-sold to them each year and that the knock-on effects could be devastating for the banking industry.
The bad news for consumers is that a large number of PPI complaints could result in banks increasing their interest rates on services like secured loans and credit cards in order to make up the lost revenue.
Brian Brown, report author and Defaqto's head of insurance, said that the firm expected thousands of consumers to make a PPI complaint after its research found that many consumers do not realise that they can shop around to find the best PPI policies, instead of accepting the ones commonly sold alongside credit products.
According to This is Money, the Financial Ombudsman Service is training staff in a streamlined complaints investigation process in anticipation of a possible flood of PPI complaints. Currently, individuals can expect to wait at least three months for cases to be decided, but this can be much longer.
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