Although payment protection insurance (PPI) still accounts for 55% of the complaints made to the Financial Ombudsman Service (FOS), perhaps the most striking thing about the complaints statistics for the year to March 31 2018 is the rise in consumer credit complaints.
31% of the 339,967 complaints received concerned banking and credit, while just 4% concerned investments and pensions. 24% of the non-PPI complaints were about consumer credit.
It was the fourth successive year in which the total complaints figure has been somewhere between 329,000 and 341,000, after two years earlier in the decade where annual FOS complaints topped 500,000.
Complaints about home credit were up by 146%, i.e. more than double, when compared to the 2016/17 financial year. Volumes of complaints concerning credit references were up by 83%; complaints regarding hiring, leasing and renting rose by 73%; grievances about payday lending rose by 64%; and complaints about all forms of consumer credit were up by 40%.
Debt management firms fared better though, with debt counselling complaints falling by 74% and debt adjusting cases by 76%.
Away from the consumer credit arena, self-invested personal pension complaints rose by 37%, while complaints about conventional personal pensions fell by 38%.
During the year, the FOS resolved more than 400,000 complaints, meaning that its backlog is reducing in size.
61% of the complaints about payday loans were upheld, which is well in excess of the uphold rate for all products, which was just 34%. The uphold rate for the entire credit sector was 47%. For PPI, it was 36%, excluding cases affected by the Plevin judgement.
Consumer credit firms need to be mindful of the fact that consumers seem to be much more willing to make a complaint about them. The FOS annual figures serve as a reminder that the interests of the customer need to be central to the corporate culture.
Common reasons for complaining to the FOS about a consumer credit firm might include:
• The customer’s application was approved without rigorous affordability and credit assessments taking place
• Use of aggressive and high-pressure sales techniques
• Unfair treatment of borrowers in arrears, e.g. refusing to accommodate realistic requests for alternative repayment arrangements
• Failing to be transparent about fees, charges and repayment obligations
• Use of aggressive debt collection practices
FOS chief executive Caroline Wayman commented:
“For us – like for the financial services sector itself – standing still simply isn’t an option. That’s why, over the last couple of years, we’ve been through the biggest transformation of our service since we were set up.
“While continuing to manage the fallout of mis-sold payment protection insurance (PPI) – with complaints still reaching us in their hundreds of thousands, accounting for over half of all those we receive – we’ve been ensuring that we’re able to respond to the problems people are having today, and that we’re ready for the future too.”
Whilst not directly mentioning the concerns raised by an expose in the Channel 4 documentary Dispatches, Ms Wayman did make reference to the independent review of the way the FOS works. This review, chaired by former Which? executive director Richard Lloyd, is expected to be published later this month.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article