06Sep

The Financial Ombudsman Service (FOS) received 107,827 new complaints in the first quarter of the 2018/19 financial year (April to June 2018). With the Service receiving only 339,967 new complaints in the whole of the last financial year, and only 135,779 during the equivalent first quarter of 2017/18, it raises the prospect of the new financial year’s final complaints total being considerably higher.

In 2017/18 the FOS received 17,256 payday loan complaints, which in itself represented a significant increase on the year before. Now the first quarter of this financial year has seen some 10,979 new payday loan cases, representing some 64% of last year’s total in just the first three months.

Although payment protection insurance (PPI) complaints still account for the majority of the FOS workload (55,223 complaints, or 54% of the total), payday loans are now the second most complained about area, making up 21% of the first quarter total of non-PPI complaints, and around 10% of the total. 13% of the non-PPI complaints were about current accounts, 7% concerned PBAs, 6% were about credit cards, another 6% related to car/motorcycle insurance and 5% were about mortgages.

Rent-to-own complaints were up by 52% compared to the same period last year, and complaints about home credit and doorstep loans were four times higher than was the case in the quarter April to June 2017. Guarantor loan complaints more than doubled over the 12 months.

The uphold rate for payday loan complaints closed during the first quarter was 56%, which is actually slightly lower than for the previous financial year. However, this uphold rate is well above the average uphold rate across all products, which stands at 35%. Only instalment loans (60%) and self-invested personal pensions (SIPPs) (59%) had a higher uphold rate.

The figures also show relatively high uphold rates for: home emergency cover (48%), income drawdown (47%), commercial vehicle insurance (46%), conditional sale (46%), catalogue credit (45%), investment ISAs (45%), share dealings (45%), point-of-sale loans (44%), cheques and drafts (44%), hire purchase (42%), portfolio management (41%), unit-linked investment bonds (41%), hiring/leasing/renting (40%) and home credit (40%).

Many of these products with high uphold rates are in the consumer credit sector, suggesting that many firms in this area need to make improvements when it comes to complaints handling, and to treating customers fairly in the first place so that complaints do not arise.

With high uphold rates for SIPPs and drawdown, the pension advice sector is also an area where standards could be improved.

The uphold rate for PPI was 35%, the same as the rate for all products. While still the fourth most complained about product, the uphold rate for PBAs was just 11%, lower than for any other area except for derivatives.

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