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.