29Jul

The Financial Ombudsman Service (FOS) has released figures for the complaints it received, and the cases it closed, during the period April to June 2015, which represents the first quarter of its financial year.

As in previous time periods, the three month period shows that the FOS upheld a high proportion of the complaints it received regarding payment protection insurance (PPI), payday lending and credit broking activities.

The FOS upheld 51% of the cases it closed between April and June, which is a reduction from the 62% decided in favour of the client during the financial year ending March 31 2015. However, the following areas all saw a larger than average proportion of complaints upheld:

• PPI (74%)
• Credit broking (69%)
• Payday loans (68%)
• Card protection insurance (68%)
• Catalogue shopping (53%)
• Store cards (52%)

PPI has been mis-sold on a massive scale over a number of years. Large numbers of complaints are still being made by consumers who allege that the insurance was unsuitable, or that the insurance was added to their loan without their knowledge or consent. The FOS is also reporting increasing numbers of complaints from consumers who believe that their provider has offered insufficient compensation.

The FOS has previously spoken of its concerns regarding credit brokers, particularly those that broker payday loans. It said that many customers were having fees taken from them by brokers who never managed to arrange a loan, and that in some cases customers were being charged multiple fees as their details were passed on to numerous other brokers. Many were misled into believing that the firm they were dealing with was actually a lender.

Common issues in payday loan complaints include affordability issues, the impact of a loan on a person’s credit score, use of continuous payment authority and disputes over whether the customer ever actually took out a loan.

89,935 new complaints were received during the quarter, of which 49,377 (55%) concerned PPI. The second most complained about area is packaged bank accounts (PBAs), which accounted for 12,119 new cases (13% of the total). The PPI figure for the period is less than one quarter of the number received during the whole 2014/15 financial year, but there is evidence that complaints about PBAs and payday loans are rising significantly. The first quarter total of complaints about PBAs was as high as 57% of the figure for the entire previous 12 months, while for payday loans the first quarter figure (457) represents 39% of the previous year’s total. However, in the first quarter only 10% of PBA complaints were upheld.

Claims management companies have been asked by their regulator, the Ministry of Justice, to consider past FOS decisions when deciding whether to pursue claims.

The figures also serve as a further reminder for payday lenders and credit brokers to raise their game, in order to avoid having to pay compensation for upheld complaints.

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.