The financial services industry needs to clean up its act and the £117m Lloyds fine should act as a wakeup call for all, the Professional Financial Claims Association has warned.
The Financial Ombudsman Service is currently inundated with too many payment protection insurance complaints to handle, the PFCA said.
At last count the service had 250,000 PPI complaints waiting for a decision in â€“ some up to six months old.
The PFCS set out three values for firms to adopt, warning: “All attempts to rebuild trust in the financial services sector will fail if these core principals are not adopted.”
The association called on financial institutions to consider complaint handling, in particular with PPI, a key consumer protection issue. It said that customers who have already suffered detriment should not suffer any more, while they have a basic right to be treated fairly.
In the six month months to December 2012 60% of all PPI claims adjudicated by the FOS were upheld in favour of the consumer â€“ and the industry has barely improved two years later with the figure standing at 57% in the six months to December 2014.
The PFCA added: “How does the industry help FOS? Clearly the Lloyds fine and FOS data shows that the industry has to do more to settle genuine cases without the assistance of FOS, which will mean FOS can focus on solving their backlog.
“The PFCA calls on the FCA to take further steps and issue renewed guidance focusing on the scrutiny of PPI complaint handling and, in particular, rejection processes.
“The FCA Lloyds decision notice confirms the use of independent â€˜skilled person reviews’.
“Such reviews should become industry norm giving regular oversight to processes which currently appear to be broken. It seems that â€˜what gets measured gets done’ and truly independent reviews are required to help rebuild consumer trust.”
In the six months to December 2014 82% of FOS complaints were upheld against Lloyds Banking Group, 61% against HSBC, 83% against HFC Bank, 87% against Firstplus and 81% against NewDay.