29th May 2013
Complaint received by the Financial Ombudsman have surged to more than 7,000 a day in the past year writes Philip Scott.
The Financial Ombudsman, the independent body, which settles disputes between consumers and financial businesses, received more than 2 million inquiries and complaints from consumers, in the past year according to its latest report.
The organisation tackled a record 508,881 new cases, an increase of 92% compared to last year. One in four of the initial inquiries received by the Ombudsman went on to become a formal dispute, up from one in five in the previous two years. But the Ombudsman’s involvement resulted in compensation for consumers in just under half or 49% of cases.
While the majority of financial sectors witnessed a hike in complaints, it was claims for the misselling of payment protection insurance (PPI) which dominated, accounting for 74% of complaints, with the number of cases rising to 378,699 – more than double the previous year.
PPI, an insurance aimed at covering consumers against failure to cover loan repayments, in the case of illness or job-loss, was missold on a huge scale, to those who neither wanted, nor needed it. Collectively, UK banks have so far shelled out more than £15bn in refunds.
Natalie Ceeney, chief ombudsman, says: “We have seen a much stronger consumer voice in the last year − with people becoming more aware of their rights and less willing to put up with poor customer service. As levels of confidence in financial services have eroded, it is disappointing that we still have not seen any significant improvement in complaints handling. Too many financial businesses still seem unable to sort out problems themselves, without the ombudsman having to get involved.
“With complaint numbers doubling, this has been another challenging year for the ombudsman. And if customer dissatisfaction remains at these record levels, the challenges we face are likely to continue for the foreseeable future.”
The report also found that 16% of people across the UK said they had had a problem with a financial product or service and that four of the UK’s largest banking groups accounted for 62% of all complaints received, a 10% rise from last year.
Other sectors which saw a surge in complaints included investment linked products, and mortgage endowments and pensions. Richard Lloyd, executive director, of consumer watchdog group, Which? says: “These shocking figures show banks are still letting their customers down and failing to help consumers with legitimate claims get the compensation they are rightly owed. The Financial Conduct Authority must take tough action against any bank found dragging its feet in settling complaints. It is time for a big change in banking, with banks that work for customers, not bankers.”
The financial ombudsman service (FOS) is a free service and has the power to sort out problems between financial businesses and customers in the UK and demand that firms pay redress.
Consumers should only contact the organisation once they feel they have reached a dead-end with the company they are complaining against. A company has eight weeks to look into a complaint. The Financial Ombudsman can be contacted on 0300 123 9 123 or 0800 023 4567, Monday to Friday – 8am to 8pm and Saturday – 9am to 1pm / email email@example.com.