Bank action left FOS with £7m deficit
Share
The Financial Ombudsman Service was landed with a deficit of £7.6m due to high-street banks’ failure to co-operate on payment protection insurance complaints.
Unaudited figures reveal that for the year to March 31 the FOS had a £7.6m deficit, nearly four times as much as the £2m deficit that had been budgeted.
In an interview with Money Marketing, chief executive Natalie Ceeney attributes the deficit to a lack of co-operation from the banks as a result of the judicial review challenging PPI redress measures.
She says: “From when the legal action started in the autumn, many of the major banks said they would not co-operate on case handling. We kept seeing complaints but our ability to resolve cases plummeted.”
Ceeney says by Christmas the FOS was aware its budget would not cover the cost of dealing with PPI complaints. The FSA agreed a £25m industry levy to boost FOS reserves in March.
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
View results 10 per page | 20 per page
Readers' comments (12)
Anonymous | 23 Jun 2011 12:51 pm
No doubt the IFA's will pick up the tab for this one as well?!!!!! No MP's on our Board!
Unsuitable or offensive? Report this comment
Anthony | 23 Jun 2011 1:13 pm
Maybe it time the IFA network became a cooperative and create the National IFA Banking Group... lead this shower by example... wouldn’t that be a worthy "Carling" moment.
Unsuitable or offensive? Report this comment
Iain Stephen | 23 Jun 2011 1:16 pm
If Ms Ceeney is factally correct, then the levy should not be made against the industry, but against the specific banks who took a stance of non-cooperation and have caused the shortfall. Authorised firms do not have their fines spread across the industry, why should banks who have been found to be guilty in this regard, also have failed in their financial crime responsibilities of PEPs / high risk individuals have everyone else pay for their incompetence and cowboy selling strategies.
Unsuitable or offensive? Report this comment
Stephen | 23 Jun 2011 1:22 pm
Anthony.
Great comment and can I take it one step further? How about creating our own professional association/trade body which guaranteed to levy its own fees for regulation and for compensation. FSA appears ineffectual in its inability to regulate (witness the many misselling episodes that it has missed and the near systemic breakdown while it was on duty) and the FOS appears to be being brought down by bank mis-selling. The IFA accounts for a very small proportion of complaints upheld, so why shoudl we associtate with either ineffective regulators, banks that lack integrity and underbudgeted FOS?
Unsuitable or offensive? Report this comment
terry | 23 Jun 2011 1:25 pm
If the banks get away with this, what is there to stop them doing again over other misselling.
IfA,s must stand up against this. theft from people who do not cause problems. Combined with the FSA the banks are doing a fantastic job of getting rid of the IFA industry. I wonder if this was the whole agenda of the FSMA act of 2000
Unsuitable or offensive? Report this comment
terry | 23 Jun 2011 1:25 pm
If the banks get away with this, what is there to stop them doing again over other misselling.
IfA,s must stand up against this. theft from people who do not cause problems. Combined with the FSA the banks are doing a fantastic job of getting rid of the IFA industry. I wonder if this was the whole agenda of the FSMA act of 2000
Unsuitable or offensive? Report this comment
Anonymous | 23 Jun 2011 1:28 pm
Yes but what the FOS is not saying here is that a large proportion of PPI complaints are sub contracted out to major Accountancy/Consultant firms. This must dramatically increase their costs.
Unsuitable or offensive? Report this comment
Anonymous | 23 Jun 2011 2:17 pm
She says: “From when the legal action started in the autumn, many of the major banks said they would not co-operate on case handling. We kept seeing complaints but our ability to resolve cases plummeted.”
By the same token IFAs should refuse to cooperate if asked to contribute towards the levy.
Unsuitable or offensive? Report this comment
DH | 23 Jun 2011 2:37 pm
The one thing that really stands out on this is the non co-operation of the banks !!!
If this was an IFA he would have his permissions striped and publicly labeled "not a fit and proper person" or "not conducting his business soundly" and "not compliant" Etc Etc
Makes me sick !!
Unsuitable or offensive? Report this comment
Norm d'Plume | 23 Jun 2011 3:08 pm
And the banks must be made to find that money!
Unsuitable or offensive? Report this comment