Inflation Falls as Ombudsman Warns of Complaints Backlog

The Financial Ombudsman Service (FOS) has warned that it could take in excess of 18 months to resolve the thousands of PPI complaints submitted by disgruntled consumers across the UK.

According to the FOS, 400,000 complaints regarding Payment Protection Insurance (PPI) remain unresolved, and it is anticipated that 60,000 of these complaints could take more than 18 months to settle.

During the previous financial year, an additional 1,000 members of staff were taken on by the FOS to deal with the influx of PPI complaints, and it is expected that the ombudsman will recruit a further 1,000 people to help deal with the backlog of complaints in the forthcoming financial year.

While customers await the outcome of their complaints with the FOS, the rate of inflation in the UK has fallen to 2% for the first time since November 2009. Figures from the Office for National Statistics (ONS), measured by the Consumer Prices Index (CPI) fell from 2.1% in November to 2% the following month.

Lower food and non-alcoholic drink prices have helped inflation fall back to the target rate set by the Bank of England, however the recent energy price hikes from the ‘big 6’ may have an negative impact on this figure in coming months. Equally, the cost of living in the UK continues to rise at twice the rate of wages in the UK, while house prices have risen by 5.4% across the UK in November, compared with the same time in 2012.

Earlier today, Labour urged the PM to block attempts by Royal Bank of Scotland to offer bonuses to their bankers of up to double their salary, after it was reported that the bank will appeal to the EU in order to be granted permission to pay their bankers up to this limit.

Shadow Treasury Chief Secretary, Chris Leslie commented:

 "At a time when families face a cost-of-living crisis and bank lending to business is falling, it cannot be right for George Osborne to approve a doubling of the bank bonus cap”

During Prime Minister’s Questions in the Commons today, David Cameron confirmed that there would be a limit to cash bonuses of £2,000, and stated that he would reject any proposals by RBS to increase its overall pay and bonus bill.

As a part-nationalised institution, RBS’ bonus debate is of course one that is going to be sensitive to tax-payers, who are suffering the rising cost of living and the repercussions of major banking scandals, while bailed out RBS mull over 200% bonuses for their investment bankers.