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Complaints to Financial Ombudsman Service rocket

PPI, bank accounts and credit cards top complaints


The Financial Ombudsman Service is free for consumers to use

During the final six months of 2010, the Financial Ombudsman Service received a total of 97,237 new complaints – an increase of 15% on the 84,212 cases received in the first half of the year.

Payment Protection Insurance (PPI) complaints

Complaints about payment protection insurance (PPI) have continued to soar as the Financial Ombudsman Service (FOS) publishes its latest complaints statistics.

The FOS received 24,955 PPI complaints in the last three months of 2010, compared with 21,320 in the third quarter of 2010 and 13,520 between January and March 2010. The 9-month total of 59,795 already dwarfs the total number of complaints received in the FOS’s previous financial year (49,196).

Which? Chief Executive Peter Vicary- Smith commented: ‘These figures reaffirm the need for a fundamental overhaul to the way many banks pay their staff. When bonus structures reward staff for selling products which may be unsuitable is it any wonder that we are seeing this level of complaints?

‘Nowhere is this clearer than in the handling of PPI complaints, where the Ombudsman’s uphold rate in favour of the consumer points to banks rejecting thousands of legitimate complaints. The FSA’s review into the reward structures for in-house sales staff is an opportunity to bring about the much-needed culture change to the banking industry.’

Which companies were worst for PPI complaints?

Providers with the highest uphold rates for General Insurance (including PPI) complaints:

  • Eisis Ltd – 95%
  • CitiFinancial Europe plc – 90%
  • Shop Direct Finance company Ltd – 90%
  • Black Horse Ltd (part of Lloyds TSB) – 89%
  • The Co-operative Bank – 88%
  • Lloyds TSB – 88%
  • MBNA – 86%
  • Firstplus plc (part of Barclays) 86%
  • Central Trust plc – 86%
  • Tesco Personal Finance – 84%

Of the major banks, consumer complaints upheld by the FOS on general insurance (including PPI) were 75% for Barclays, 72% for Natwest and 69% for RBS.

For PPI, the actual uphold rate could be higher. This is because most banks also sell other types of insurance products alongside PPI and the overall uphold rate might be lower because of lower uphold rates for these types of insurance.

Complaints received about Capital One general insurance (including PPI) increased from 843 to 3,990. Recent FSA data indicated that the company was only upholding just 1% of the complaints it received about general insurance (including PPI) in the first six months of 2010.

Tesco Personal Finance had 84% of complaints about general insurance (including PPI) upheld in favour of the consumer. Figures released by the FSA show that the firm itself was upholding just 11% of the complaints it received about general insurance in the first six months of 2010.

The number of PPI complaints upheld by the FOS fell to 66% in the final quarter of 2010, compared with 73% in the third quarter and 89% in the previous financial year. This fall may be due to increased activity by claims management companies putting in unsuitable claims. It should not deter consumers from putting in their own complaint for free using the Which? PPI claims tool.

Current accounts and credit cards next biggest areas of complaint

There were 5,108 complaints about current accounts in the final quarter of 2010, and 4,087 about credit cards. Both of these totals were down on previous quarters. Mortgages were the next biggest source of consumer complaints, with Clydesdale Bank having 84% of complaints upheld and Southern Pacific Mortgages (formerly part of Lehman brothers) seeing 54% of complaints upheld.

Companies attracting the highest number of complaints to FOS

Overall, the companies with the largest number of complaints were:

  • Lloyds TSB (12,234)
  • Santander (6,759)
  • Bank of Scotland (6,743)
  • HSBC (6,736)
  • Barclays (6,535)
  • Capital One (4,458)
  • NatWest (3,760)
  • MBNA (3,430)
  • Royal Bank of Scotland (3,286)
  • Clydesdale Bank (2,901)
  • Welcome Financial Services (2,449)
  • Black Horse (part of Lloyds) (2,138)
  • Nationwide Building Society (1,530)

To find out more about putting in a complaint to your provider or to the Financial Ombudsman Service, take a look at our guide.

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