06Jun

A significant increase in the numbers of complaints being received about packaged bank accounts (PBAs) and payday lending led to the Financial Ombudsman Service (FOS) receiving more complaints in the 12 months to March 31 2016 than in the previous year.

The FOS received 340,899 new complaints during the financial year, which is 3.5% more than in the 12 months to March 31 2015. Payment protection insurance (PPI) still accounts for the majority of the complaints, with 188,712 (56%), but the figure for this product was down 8% on the previous year.

PBA complaints rose by 107%, i.e. more than doubled, to 44,244; while payday lending complaints were up by 178%, i.e. they almost tripled, to 3,216. There were significant increases in complaint volumes for some other areas of consumer credit, with a 72% rise in hire purchase complaints and a 69% increase in home credit complaints. Credit firms should note that customers now appear to be more willing to complain when they believe they have not been treated fairly.

Credit broking is an area that the FOS has flagged as a concern in the past, but here complaint numbers were down by 54%.

Claims management companies (CMCs) were used by consumers for 81.5% of the PPI complaints and 61.5% of the PBA complaints, but only 5% of the grievances raised in other areas. In its annual report, the FOS says it has had “frank conversations with claims managers”, and that it continues to report poor conduct by CMCs to their regulator.

Four banking groups were collectively responsible for the majority of the complaints, while 49 firms had more than 500 cases referred to the FOS. 72% of all cases and 83% of the PPI cases concerned the UK’s banks.

The FOS reduced its backlog of complaints by almost 100,000 by resolving 438,802 cases. 51% of the resolved complaints were upheld, i.e. the organisation found in favour of the complainant and judged that the financial firm had incorrectly rejected the complaint in the first place. 66% of PPI complaints were upheld, which is similar to previous years, but only 18% of PBA complaints were upheld in 2015/16, down from 36% last year. When we look solely at PPI complaints concerning banks, the uphold rate rises to 72%.

The backlog of PPI cases alone fell by around 700,000, but still 20% of the FOS’s open PPI cases have been outstanding for two years or longer. There is still much work to do before the organisation can draw a line under the PPI mis-selling saga.

Consumer credit firms and independent financial advisers both had uphold rates that were below average, at 49% and 40% respectively. The uphold rate for building societies was just 16%.

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.