A recent report issued by the watchdog organization has revealed that banks will need to provide more in payouts.
The Financial Ombudsman Service in the United Kingdom has now stated that the number of complaints that it has received with regards to the insurance news of the mis-selling scandal in the country have skyrocketed within the six months that ended in September.
This has increased the odds that banks will be required to pay a higher amount for compensations.
The Financial Ombudsman Service is the official watchdog that steps in when customers and their banks are not capable of resolving a disagreement on their own. That group made an insurance news statement that has revealed that between the months of April and September, it received over 247,000 complaints regarding the mis-selling of payment protection coverage. When compared to the same period in 2012, this is an increase of 147 percent.
This insurance news has already had banks setting aside £16 billion for the purpose of compensation.
For this reason, this insurance news has become the most expensive consumer scandal that the U.K. has ever experienced. It is now believed that the total amount of the payouts may rise to reach £20 billion.
The policies that were being sold were actually a legitimate form of coverage. However, the insurance news began when they were being improperly sold. Though the coverage was meant to help to protect borrowers in the event that they should become sick or unemployed and therefore unable to make their loan payments. The problem occurred when these individuals were being sold the products without their consent, or to people who would have been ineligible to make a claim should they become sick or unemployed.
At the same time, the insurance news has expanded as new regulations have made it easier for consumers to be able to switch banks. This has led to an increase in 11 percent in customers that have been moving their accounts, all since the rule was first introduced, last month. Since September 16, there have been 89,000 account switches that have been completed, according to statistics from the Payments Council.