Half a million cheated out of PPI compensation by FOS?

Half a million lost out?

An undercover operation by the Channel 4 “Dispatches” programme claims to have uncovered evidence that up to half a million people may have been cheated of a PPI payout by the Financial Ombudsman Service (FOS)

The shock allegation was aired in a special programme aired on March 12th and claimed some staff were so poorly trained they had to Google the name of the financial products they were investigating.


Now ministers are being asked to investigate why FOS has failed to protect PPI complainants across the country.

Listening to some of the revelations on the programme former pensions minister Baroness Ros Altmann said: “That is truly shocking and, I would say, utterly unacceptable.”


An expert analyst told the programme research had revealed that in excess of half a million complainants had not been treated fairly by FOS with their PPI claims being allegedly mis-handled.

Baroness 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 this and ask for the management of the Financial Ombudsman Service to justify some of the evidence that we’ve seen here.”


The evidence was produced by an undercover investigation in which a female reporter underwent a six month training programme and found FOS staff had been placed under enormous pressure to deal with a huge backlog of PPI claims.

Employees admitted making decisions without properly investigating the case they were allocated in order to hit targets.

Others, threatened with missing out on pay rises and promotions, leaned towards rejecting the claims because it was quicker than challenging the banks.


FOS is an independent organisation whose job is to mediate in cases where consumers and banks cannot agree over a mis-selling complaint.

They are tasked with investigating the evidence from both sides of a complaint and then deciding, on balance, whether the consumer’s appeal should be upheld or rejected.


“Dispatches” started their investigation after hearing from three whistleblowers who were all former FOS employees.

One revealed that at one stage FOS had a backlog of 11,000 cases which ‘fell into a black hole’ and were not touched for two years.

The informant admitted 1,000 letters were found unopened in 2015 and again in 2016. He added: “Some were two years old and there were cases saying ‘I’m going to lose my house.’

Instead of recruiting more staff to deal with the backlog, FOS upped staff targets meaning they had less time to properly investigate their caseload.


Another whistleblower revealed staff who did not meet their targets were forced to stay late. She added: “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.”

That statement was backed up by what the undercover investigator was told by current FOS staff that she was more likely to meet her targets if she didn’t uphold claims.

She said: “The upholds aren’t very good for closures. You just need to make one call to the consumer rather than trying to persuade the business. That’s usually actually a lot harder.”

Cover up

One of the inside informants also admitted a FOS delegation had tried to cover up its chaotic organisation by ‘rehearsing cases’ before a visit by Treasury Select Committee MP Rushanara Ali in 2015 at the height of the PPI backlog.

The whistleblower said: “We ‘managed’ the visit to make the service look better than it was.  There was a fake case handling session and it was to show that the adjudicators and ombudsman were working together.

“It was an executive attempt to try and hide the fact that people just didn’t know what they were doing.”


Ms Ali commented: ‘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.”

Are you missing out?

Baroness Altmann called on the government to ask FOS to explain what had been going on and Ms Ali said: “I would hope that our committee can call them back in and, if necessary, conduct an inquiry into these allegations.”

Programme presenter Morland Sanders summarised by saying: “Do hundreds and thousands of your cases relating to PPI, banks and credit cards need to be looked at again? Are you missing out on money that’s rightfully yours?”


In a statement, FOS said it was taking the issues raised by the programme very seriously, adding: “The impression given is clearly not representative of us at our best.  Our people are committed to doing the right thing and we always want to know how we can improve.

“We are determined to provide the best support for our staff and a fair and trustworthy service for our customers.”