Customer complaints about mis-sold payment protection insurance (PPI) policies by financial institutions in the UK are piling up faster than the independent Financial Ombudsman Service can handle them.
In fact, the service is receiving about 5,000 complaint cases a week and there’s no let up in sight.
The ombudsman, which resolves disputes between customers and financial businesses, expects to receive the same number of new PPI cases every week for the rest of this year and into 2014, according to an article in The Telegraph.
To date, the ombudsman service has hired 1,000 workers to deal with the surge in complaints about the mis-sold PPI policies. And it expects to hire another 1,000 employees in the coming tax year to deal with what the service calls an unprecedented level of complaints.
According to data from the Financial Services Authority (FSA), the UK’s financial services regulatory agency, more than three million consumers have complained to banks and other financial institutions about PPI.
PPI is designed to protect borrowers who find themselves out of work because of sickness or because they’re laid off. However, the policies are often sold to customers who don’t need them along with other financial products like personal loans or credit cards, according to The Telegraph.
To compensate their customers, the UK’s biggest banks have already earmarked over $19.3 billion (£12 billion). Lloyds, which has the most customers of any UK bank, has set aside $8.5 billion (£5.3 billion) to settle customer claims, The Telegraph notes.
“It’s disappointing that we’re still seeing significant numbers of unresolved disputes about mis-sold policies being referred to the ombudsman,” deputy chief ombudsman Tony Boorman says in the article. “Our proposals ensure we have the resource to tackle these record case volumes and the businesses responsible for generating the biggest workload contribute the most to sorting it out.”
The ombudsman expects it will have handled 250,000 new cases relating to the mis-selling of PPI policies between April 2012 and April 2013.
To help pay for the work it has to do, the service is proposing to increase the fees it charges to financial services firms that refer cases to the ombudsman by $81 (£50) to $888 (£550), according to The Telegraph.
It seems that today financial institutions are focusing on the way they treat customers to increase revenue, protect their brands in this world of social networking, and respond to regulatory demands.
However, organization and process design are often developed without consideration for the customer and/or increased regulatory scrutiny.
And this makes it challenging for these financial services firms to provide oversight, analysis, resolution, and reporting of consumer inquiries and complaints.
But financial analytics tools, including a complaints dashboard, can help banks and other financial institutions improve the customer experience as well as the employee experience, operate more efficiently and better respond to inquiries from regulators.
The complaints dashboard integrates data from multiple sources and provides a consolidated view of customer complaints to help financial institutions better develop and/or manage customer complaint processes and capabilities, according to Ernst & Young LLP.
Additionally, the complaints dashboard supports root cause analysis to drive process improvements and reduce the volume of complaints.
In the UK, part of the FSA’s response to customer complaints regarding PPI policies included guidance regarding a “root cause analysis” that it asked relevant financial services firms to undertake to determine, among other things, an assessment of whether customers who had not (yet) brought complaints might also be entitled to compensation, according to the Insurance and Reinsurance Newswire.
A financial analytics tool like a complaints dashboard would have made it easier for these institutions to respond to the FSA’s request.
Next Steps:
- Please join us on January 16th at 2 p.m. EST for our complimentary webcast, “Spotfire Analytics for Customer Complaints.” During this webcast Lisa Ducharme and Jacob Thiel of the Financial Services Office of Ernst & Young LLP will lead an interactive demonstration of a complaints dashboard, using the TIBCO Spotfire analytics platform, to demonstrate how visual analytics assists clients to improve the customer experience, the associate experience, realize operational efficiencies, and respond to regulator inquiries.
