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Big rise recorded in financial complaints in 2007

28/05/2008

Complaints over financial products were up 27 per cent in the last 12 months, the Financial Ombudsman Service (FOS) said on Wednesday.

The free complaints service also saw a 30 per cent rise in the number of complaints turning into disputes.

In total there were 794,648 initial enquiries and complaints from consumers, with 123,089 cases leading to disputes.

Over half of the total number of cases dealt with by the FOS related to just six of the UK's largest financial services groups.

The FOS report shows a fall in the number of mortgage endowment complaints – as the window available to raise these disputes closes – but complaints over bank charges grew substantially.

"Banking-related disputes had risen by almost 50 per cent in the previous year – fuelled largely by consumer dissatisfaction with the level of unauthorised-overdraft charges," said Sir Christopher Kelly, chairman of the FOS.

"In the first quarter alone of the 2007/08 financial year, we received some 20,000 new complaints about these charges."

However, complaints about payment protection insurance (PPI) have also seen a massive upswing.

Sir Christopher said: "During [the final quarter of the 2007/08] we received record numbers of complaints about payment protection insurance and in the first three months of 2008 we received more payment protection complaints than in the whole of 2007."

He explained this was due to media and internet campaigns as well as the Financial Services Authority (FSA) making huge PPI fines.

Some 39 per cent of all insurance complaints covered PPI, while 22 per cent covered motor insurance.

Of all cases 56.6 per cent covered banking and credit cards, 22 per cent of complaints were about insurance, 11 per cent covered mortgage endowments and 10.5 per cent covered investments and pensions.