Page last updated at 11:08 GMT, Thursday, 25 February 2010

Complaints about financial services firms rise again

10 being withdrawn from cash machine
The big banks, which have the most customers, attracted most complaints

The number of new complaints made to the Financial Ombudsman Service (FOS) about financial firms rose by 18% in the last six months of 2009.

The FOS received 82,136 complaints, up from 69,841 in the first half of the year.

However, the proportion of complaints upheld by the ombudsman fell from 59% to 53%.

The FOS said its new policy of naming and shaming appeared to be changing the way firms dealt with complaints.

"While the number of cases referred by consumers to the ombudsman has continued to increase substantially, it's encouraging to see that some businesses are committed to handling complaints better," said the interim chief ombudsman, David Thomas.

"However, there is evidently still room for significant improvement in the way other financial businesses handle complaints - judged by the proportion of cases where we overturn the decision that the businesses have themselves come to in their own earlier investigation of their customer complaints."

Big banks

The FOS deals with complaints from people who are unhappy with the way financial firms have dealt with their problems in the first instance.

MOST COMPLAINTS BY BANKING GROUP
Lloyds Banking Group - 20,190
Barclays - 10,892
RBS - 7,098
Abbey - 4,918
HSBC - 3,881
Source: FOS, second half of 2009

The five biggest banking groups accounted for nearly 47,000 of the new complaints received by the FOS - 57% of the total.

These were the Abbey (recently renamed Santander), Barclays, HSBC, Lloyds and RBS groups, which included not only their traditional High Street outlets but also their subsidiaries dealing in insurance and investments.

As a result, thousands of complaints were made about the banks' general insurance businesses, as well as about their banking and lending arms.

In the second half of last year the most complained about individual firms were Lloyds TSB bank (9,952 complaints), Barclays bank (9,836), and Bank of Scotland (7,349) which is also part of Lloyds Banking Group.

In the case of Lloyds TSB bank the number of complaints about its general insurance sales outnumbered those about its banking and lending.

"The rise in complaints we have seen through the FOS is most likely down to an increased awareness of complaints procedures, and of the FOS itself," said Kevin Mountford of Moneysupermarket.com.

"High profile campaigns, such as that of the OFT against overdraft charges on current accounts, will also have had a significant impact on the number of complaints made."

Decisions

The FOS figures for the outcome of its adjudications - many of which involved complaints lodged in the first half of the year - show that the greatest percentage of complaints upheld tended to be against credit card and loan companies rather than High Street banks.

HIGHEST PERCENTAGE OF COMPLAINTS UPHELD
Eisis - 100%
Ocean Finance - 100%
Wills & Co Stockbrokers - 98%
Welcome Financial Services - 92%
Central Trust - 91%
Source: FOS, second half of 2009

While Lloyds TSB had attracted most complaints from unhappy customers, only 51% were eventually upheld.

The financial services industry has been deluged with complaints in the past two years about the mis-selling of payment protection insurance.

As the ombudsman has previously pointed out, most firms on the end of these complaints appear to have significant problems dealing with them properly.

On average, 68% of complaints about general insurance were upheld, compared with 47% for banking and lending, 37% for mortgages and home finance, 44% for investment, and 33% for life insurance and pensions.

Some well known names such as MBNA and the Co-op bank had more than 90% of general insurance complaints against them upheld.

The firm with the most success in defending itself against any sort of complaint to the FOS was the Chelsea building society. The ombudsman upheld just 10% of the complaints against it.



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