More customers going to
ombudsman – but for PPI rather than HP
grievances.
Go deeper with GlobalData
While motor finance companies
are seeing fewer customers resort to the Financial Ombudsman
Service (FOS) to settle grievances about car finance agreements,
the number of complaints related to payment protection insurance
(PPI) continues to climb on the back of relentless action by claims
firms.
PPI complaints made up 50% of
all issues forwarded to the FOS in the year’s final quarter, up
from 45% in the third quarter of 2010 and 34% in the second
quarter, the first quarter in which the FOS began publishing
complaint figures by product association.
Overall, the continued
crusade against PPI meant that the FOS received 15% more complaints
against financial institutions in the second half of 2010 than in
the preceding six months – with motor finance companies taking
their share of the increase.
Of all motor finance
providers covered by the statistics published by the FOS, only BMW
Financial Services and Banque PSA Finance saw declines in the
number of complaints received.
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By GlobalDataHowever, the majority of
complaints connected to motor finance companies were related to
PPI, reflecting the continuing increase in action by claims
management companies against providers of the product.
While most PPI claims against
motor lenders are found to be purely speculative, they are still a
burden to the motor finance industry, since any referral to the
FOS, regardless of whose favour the complaint is settled in, incurs
a cost to the lender of more than £500.
By contrast to the
overwhelming number of PPI complaints taken to the FOS, complaints
about point of sale credit agreements made up only 1% of the
service’s new cases in the final quarter of last year, down from 2%
in the third quarter.
With PPI complaints not taken
into account, both market leader Black Horse and number two
Santander Consumer Finance saw lower numbers of complaints make it
through to the FOS in the second half of the year.
BMW Financial Services was
the only business to have generated no PPI complaints.
The figures published by the
FOS may also not be entirely representative of the industry as a
whole, since they leave out many of the market’s largest providers
of finance.
This may be because these companies have a policy of
settling claims with customers before they get in touch with the
FOS.
