Overall complaint volumes may have reduced from those seen in the last quarter, or 12 months ago, but the FOS is still reporting large increases in the numbers of complaints its is seeing concerning certain credit products, such as guarantor loans and home credit. FOS also used the latest issue of its Ombudsman News newsletter to share some examples of the coronavirus-related complaints it is receiving.
The Financial Ombudsman Service has revealed that it received 57,509 new complaints between April and June 2020, which was the first quarter of the new financial year. This figure is 4% lower than in the final quarter of the 2019/20 financial year and 18% lower than the equivalent figure for the first quarter of 2019/20.
Across all product areas, 32% of the complaints closed by FOS during the first quarter were decided in favour of the customer, although this uphold rate rises to 40% when payment protection insurance complaints are excluded. PPI continues to be the most complained about product and still makes up more than one-quarter of FOS’s workload, even if PPI complaint volumes were down by 39% compared to the previous quarter, with the FCA deadline having passed last August. The overall uphold rate remains largely unchanged when compared to other recent periods.
Some areas of consumer credit continue to show very large increases in complaint numbers. Guarantor loan complaints soared from 415 in Q4 2019/20 to 1,1017 in Q1 2020/21 and home credit complaints rose from 445 to 1,166. These figures were just 141 and 257 respectively 12 months ago.
Payday loan and instalment loan complaint volumes for Q1 2020/21 are actually slightly lower than for Q4 2019/20, but FOS cautions against complacency here, and suggests that this may have more to do with firms in this area entering into liquidation, rather than any improvement in firms’ lending standards.
Uphold rates in many areas of consumer credit remain high. The Q1 uphold rate for guarantor loans was 85%, compared to 81% in the previous quarter. For home credit the Q1 uphold rate was unchanged at 86%. Turning to payday loans, the uphold rate was 57%, down from 66%; while for instalment loans, 67% of complaints were upheld, down from 73% in Q4.
The uphold rate for claims management complaints was 50%. FOS says that 170 of the 245 claims management complaints it received concerned PPI, and that a growing number of complaints concern the failure of a CMC to refer a consumer’s PPI claim to the relevant firm prior to last August’s PPI deadline.
FOS has also revealed that it has received more than 3,500 complaints which it believes are related in some way to the Covid-19 pandemic. FOS also says that some of these cases have posed new challenges, noting that:
“Covid-19 has given rise to many new and complex questions of fairness. Since the early days of lockdown in March 2020 … we’ve heard from consumers and small and medium enterprises (SMEs) about situations we couldn’t have anticipated before the pandemic.”
FOS says that examples of coronavirus-related complaints it has seen include:
- People who have experienced financial difficulties for the first time as a result of the pandemic
- Other consumers for whom the health emergency has compounded financial struggles that already existed
- Issues related to cancelled holidays and events
- Small businesses who have been unable to trade
- Borrowers saying they had been unfairly refused a payment deferral or other forbearance arrangement from their credit provider
- Other borrowers who had experienced difficulties in setting up payment arrangements
- Service-related complaints from customers saying that firms failed to provide an adequate standard of service, perhaps because the firm incorrectly expected everyone to be able to use online services, or because they reduced the number of staff who were available in the office
In some ways, the pandemic is easing, but FOS suggests that the number of complaints relating to financial difficulties might still increase in the coming months, as lender payment arrangements come to an end.
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