Former pensions minister Baroness Ros Altmann said: ‘That’s hundreds of thousands of people who appear not to have been treated as fairly’
Up to 500,000 victims of Britain’s biggest mis-selling scandal may have been cheated out of compensation by the financial ombudsman, it emerged last night.
An undercover probe has found staff at the Financial Ombudsman Service were placed under enormous pressure to process a huge backlog of complaints about payment protection insurance (PPI).
Employees admitted making decisions without investigating properly in order to hit targets.
Threatened with losing pay rises and promotion if they did not meet their goals, staff said they leaned towards rejecting complaints as this was quicker than challenging the banks.
The probe by Channel 4’s Dispatches found that some employees were so inexperienced or poorly trained that they had to Google the name of the financial products they were investigating.
And it has exposed the ruthless approach taken by some staff, with one customer not allowed to complain because he had missed the deadline – even though he had earlier fallen into a coma.
The ombudsman has rejected 496,000 complaints and upheld 924,000 in customers’ favour since banks lost a crucial high court challenge on PPI in April 2010.
Last night ministers were urged investigate whether the ombudsman has failed to protect consumers across Britain.
Former pensions minister Baroness Ros Altmann said: ‘That’s hundreds of thousands of people who appear not to have been treated as fairly as you would wish from the ombudsmen service. I think the government should urgently look at and ask for the management of the Financial Ombudsman Service to justify some of the evidence that we’ve seen here’.
Banks have been forced to set aside almost £30billion to compensate around 12 million customers who were mis-sold PPI.
Sold alongside personal loans and credit cards it was meant to provide a safety net if people lost their jobs or became too sick to work.
James Daley, founder of consumer campaign website Fairer Finance, said: ‘I think it’s a toxic combination isn’t it the combination of a lack of training at the same time as piling pressure on adjudicators to get through cases.
But in many cases it was completely worthless, with people unable to claim on the policy or unaware they had been sold it.
Banks continue to reject legitimate complaints, forcing customers to take their case to the independent financial ombudsman.
The investigation was launched following damning testimony from three whistleblowers – all former investigators at the Ombudsman.
Channel 4’s Dispatches then sent an undercover reporter to work for the ombudsman, which is based near London’s Canary Wharf.
The whistleblowers reveal that at one stage the ombudsman was grappling with backlog of 11,000 PPI cases.
But instead of recruiting more staff, it upped staff targets meaning that they had less time to investigate cases.
One whistleblower said 11,000 ‘fell into a black hole’, with many not looked at for two years.
‘There were cases saying I’m going to lose my house. I’m not proud to admit it but I’ve done it myself – just taken a chance and just slung it through with any old decision.’ Another whistleblower added: ‘There’s been real pressure on staff. If you can’t meet your target, you have to stay late. It’s inevitable you take a hit on quality. I have done it – had cases where I’ve not made full thorough checks. Rushing can lead to leaning in favour of the bank.’ The accusations were backed up by current staff who spoke to the undercover reporter while she was completing a six month training programme.
At one stage she shadowed an investigator, who told her that she was more likely to meet targets if he didn’t uphold claims.
The FOS has also been accused of trying to cover up its chaotic organisation, deliberately misleading the Treasury Select Committee by rehearsing cases before a visit by MP Rushanara Ali in 2015 at the height of the PPI backlog
‘The upholds aren’t very good for closures,’ the investigator said. ‘You just need to make one call to the consumer rather than trying to persuade the business. That’s usually actually a lot harder.’ In one training session a manager talks about a colleague’s case when a customer missed the six month deadline to complain after falling into a coma.
Customers are given longer to complain if there are exceptional circumstances.
But the manager explained: ‘Exceptional circumstances is a very high bar. Sounds really harsh, but what we need to decide would he ever basically have referred that complaint in six months?Was it the fact he slipped into a coma that prevented him? And you need to make a judgment call there.’
James Daley, founder of consumer campaign website Fairer Finance, said: ‘I think it’s a toxic combination isn’t it the combination of a lack of training at the same time as piling pressure on adjudicators to get through cases.’
The FOS has also been accused of trying to cover up its chaotic organisation, deliberately misleading the Treasury Select Committee by rehearsing cases before a visit by MP Rushanara Ali in 2015 at the height of the PPI backlog.
One whistleblower said: ‘We “managed” the visit to make the service look better than it was,’ one of the whistleblowers said. ‘There was a fake case handling session and it was to show that the adjudicators and ombudsman were working together.’ Ali said:‘If they tried to pre-cook or rehearse or inappropriately to mislead me or any other visitor, I’d be very disappointed and would expect them to explain themselves.’
She added:‘They are accountable to parliament, they are accountable to the public and they’ll need to explain themselves. I would hope that our committee can call them back in and, if necessary, conduct an inquiry into these allegations.’
A spokesperson for the Financial Ombudsman said: ‘We have resolved over 1.4 million PPI complaints – and we have upheld two thirds of these in favour of consumers, finding against the banks. We haven’t seen the programme yet, but we will of course consider any concerns it raises.’
Dispatches: Who’s Policing Your Bank? Is screened on Channel 4 tonight at 8pm.