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PPI and the Financial Ombudsman Service

Payment protection insurance (PPI) is now considered to be the most complained about financial product ever to be sold in the UK.

The majority of customers are being compensated by their bank or lender correctly but, there are times when PPI compensation is not so forthcoming from banks. When there is a dispute concerning any financial product, the body that regulates and making the final decision is the Financial Ombudsman Service, known as FOS.


PPI has been a mis-selling scandal that has rocked the British banking industry. It has forced many changes, including a re-vamped financial sector regulator - with much-needed teeth, some critics would say – called the Financial Conduct Authority (FCA).

But there are still cases where the consumer is not being compensated but, rather than assuming that nothing more can be done, many people are taking their cases to FOS.

And, it is paying off with FOS still finding in favour of the consumer in 7 out of 10 cases.

Over the years, FOS has identified that consumers are coming to them with three types of PPI complaint;

Firstly, they receive complaints from customers who have tried to make a claim against the PPI policy but have been turned down. In some cases, this is due to the small print of the terms and conditions which many consumers had no idea existed, feeling perhaps that they attention was not fully drawn to these exclusions – if they had, many people argue, they would not have bought the policy!

Secondly, FOS found that many complaints centred on mis-selling, something that we also see a lot of. Many people feel that they did not know they were buying an insurance policy and neither did they want it. Many people also felt that the PPI policy was not properly described to them, a common complaint amongst the thousands of people claiming their money back.

And finally, FOS found that many complaints related to the refunds of premiums themselves. This is especially prevalent in cases relating to single premium policies in which the customer paid for the policy upfront, with this amount usually added to the cost of the loan. If the customer paid off the loan early, they only received a small refund (but not in all cases); many people felt this was unfair.

In recent months, FOS have also said that they feel the nature of the complaints are becoming more complex too.

Before you go to FOS, you need to make a claim direct to your bank or lender – is this something Payment Protection Scotland could help you with?

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