The Financial Ombudsman Service (FOS) has published data on the complaints it received during the first quarter of the new financial year, and it is no surprise to see that payment protection insurance (PPI) again accounted for the majority of the complaints. However the PPI total for the period April to June was less than one quarter of the total PPI complaints made to FOS in the full 2015/16 financial year, suggesting once again that complaints about this product are tailing off.
The most startling figure from the first quarter stats though is that 2,729 complaints were made about payday loans during the three month period. The FOS received 3,168 of these complaints during the entire 12 months ending March 31 2016, and just 1,157 in 2014/15, so it appears that customers are becoming more willing to complain about payday lenders.
Furthermore, of the payday loan complaints closed by FOS in the first quarter, a majority (55%) were decided in favour of the customer. This means that lenders that fail to treat customers fairly are regularly being asked by FOS to pay compensation.
Lenders need to make sure they make responsible lending decisions, that they provide all necessary information to their clients and that they treat borrowers in arrears with compassion.
Tashema Jackson, money expert at uSwitch.com, said:
“The eye-watering increase in payday loan complaints suggests that, despite the changes the regulator has made to the industry, many short-term lenders are still giving their customers cause for complaint.
“For people who have been turned away from traditional lenders, it’s simply not fair that they feel their only option is payday lenders who are failing to treat their customers fairly.”
Packaged bank accounts (PBAs) were the second most complained about product, with the FOS taking on 7,315 new cases during the quarter. However, given that there were 44.260 new PBA cases in 2015/16, complaint numbers in this area also appear to be reducing.
Complaints about credit cards, hire purchase, debt collecting and self invested personal pensions (SIPPs) also appear to be on the rise.
Of the complaints closed in the first quarter, SIPP complaints had the highest uphold rate, at 66%. A number of claims management companies are now taking on pension cases, and firms that offer SIPPs need to ensure that:
• A SIPP is not recommended to a client for whom a regular personal pension with lower charges would have been more suitable
• The file clearly demonstrates why a SIPP was recommended over other retirement saving options
• The client’s attitude to risk and capacity for loss are correctly identified
• The investment recommendations made are in line with the attitude to risk and capacity for loss
• The suitability of the underlying investments is considered, not just the suitability of the SIPP itself
• The client is made fully aware of the risks of the underlying investments
• Clients are not recommended to invest a large proportion of their retirement savings in high risk areas, such as overseas property, unregulated collective investment schemes or fine wines
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.