Banks have been warned they still need to improve the way they handle Payment Protection Insurance (PPI) complaints.

The Financial Services Authority (FSA) has complained too many people are being forced to take their mis-sold PPI cases to the independent Financial Ombudsman Service (FOS).

The FOS, which acts as a mediator between customers and their banks, still receives up to 1,000 complaints a week about PPI and upholds 90% of these cases in favour of the customer.

Emma Parker from the FOS said “Banks still need to improve the way they handle PPI complaints. We will continue to work with the regulator where we see banks treating customers unfairly.”

The Competition Commission announced earlier this year customers would have a 7 day cooling-off period, allowing them to shop around for PPI and not feel pressured by banks and building societies to take out a policy at the point of obtaining finance.

Vera Cottrell of Which? said “Banks have been warned countless times by the FSA and the Ombudsman about PPI complaints and it is incredibly disappointing that they are refusing to implement the FSA’s guidelines. Banks are wasting everyone’s time by automatically rejecting so many complaints — the vast majority of cases should not have to go to the Ombudsman.

The FSA is currently in the process of putting together tougher new rules regarding the way PPI is sold and how mis-sold PPI complaints should be dealt with by banks.

A spokesman for the FSA said “We remain firmly of the view that the PPI market is broken and needs to be fixed. We are committed to bringing about genuine, lasting change, and the package of measures we hope to finalise this summer will go a long way to address this.”

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