27Nov

FOS quarterly data shows a fourfold rise in guarantor loan complaints since the previous quarter – FOS also publishes its annual report

The Financial Ombudsman Service received 68,735 new complaints in the second quarter of its financial year, which covers the period from July 1 to September 30 2020. This figure is 19% higher than the figure for the first quarter of 2020/21 (April to June) and 20% higher than for the same period in 2019/20.

Payment protection insurance remains the most complained about product, but with 12,742 complaints, volumes here have reduced to just 19% of the total.

Compared to the first quarter, guarantor loan complaints rose massively. Complaints about this product are up by 298%, i.e. by a factor of almost four, to 4,191. Home credit complaints were 144% higher than in Q1, at 3,199. Credit card complaints were up by 26% to 3,828.

Travel insurance complaints have risen by a factor of 2.5 over the quarter, an increase that FOS attributes directly to Covid-19 and the number of cancelled holidays.

32% of all the complaints closed by FOS during the second quarter were upheld, and this rises to 41% when PPI is excluded. Both of these figures are similar to those seen in the first quarter.

The highest uphold rate for any individual product was 88% for guarantor loans. The uphold rate for home credit was also very high, at 72%.

Q2 also saw FOS receive 278 complaints about claims management companies, with 186 (67%) of these complaints relating to PPI claims. The 278 figure represents a 13% increase on the equivalent figure from Q1. 38% of all CMC complaints in Q2 were upheld, and this figure was 34% when only PPI complaints are considered.

FOS has also published its annual report for 2019/20. This is not the same as the annual review, which contains detailed information on the numbers of complaints received and numbers of complaints closed during the last full financial year.

The annual report shows that FOS received considerably fewer complaints during the last financial year than it had budgeted for – 273,026 against 460,000. PPI complaint volumes, in particular, were less than half of expected levels.

FOS resolved 296,712 complaints in 2019/20, 23,686 more than the number of new cases, so it made limited progress in clearing its backlog. Only 23% of complaints were resolved within 45 days. FOS had a target for the year of resolving 95% of its longest running cases – those which would have been with FOS for at least 12 months by March 31 2020 – but was only able to achieve a score of 90% here.

In 2020/21, FOS predicts it will receive 245,000 complaints, of which 100,000 will concern PPI. It expects to resolve 305,000 complaints, including 140,000 PPI cases.

It expects to raise 70% of its income via case fees and 30% via the general levy. Firms will continue to receive 25 free cases per year before paying a case fee of £650 per case.

The report also contains a timely warning for CMCs about the conduct standards FOS has seen from them:

“CMCs’ behaviour has caused operational difficulties and delays in some cases, with some complaints poorly-administered and evidenced. We continued to flag these shortcomings to the CMCs’ regulator, which from 1 April 2019 has been the FCA.”

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 of the facts, circumstances or legal position may change after publication of the article