Banks and building societies complaints keep coming

Banks and building societies are continuing to upset their customers, with the Financial Services Ombudsman on course to break last year’s record of one complaint every ten seconds – over one million reports in the twelve-month period.

The organisation’s year-end occurs in April and analysts are predicting a 40% increase from the previous year, rising to 1.4 million complaints from the financial industry’s unhappy clients. That figure is far from the full total of dissatisfied customers; the FSO only becomes involved as an intermediary when the bank or building society has rejected the initial complaint as lacking in merit.

Such a dramatic rise in the number of complaints being dealt with by the FOS doesn’t just suggest that more customers are unhappy, but that more financial institutions are fobbing off clients who have legitimate cause for complaint. For example, there were over 55,000 cases handed over to the FOS between October and December last year with half of those being found in favour of the customer.

FOS staff expect that more complaints will roll in during March and April as families sort through their end-of-year finances and discover hidden charges. It is also thought that increasing levels of personal debt are creating more financial complaints, as consumers have to deal with pay-day loans and credit card charges.

The end of 2011 saw a huge jump in complaints referred to the FOS as unscrupulous claims management companies started to pester consumers to take legal action against banks for insurance charges on their loans. While there is no doubt that some customers do have a case against financial institutions for PPI charges, the FOS has been bombarded by complaints referred from banks and building societies that have no merit, despite claims management companies insisting the case goes ahead.

While the FOS has handled almost 300,000 PPI complaints in the last year, the organisation has also had to deal with over 1,000 cases involving persistent claims management companies and collection agencies; a rise of over 15% on the previous twelve-month period. In the three months leading up to Christmas 2011, the number of claims relating to PPI rose by almost 60% compared to the same period on 2010.

A staggering eight out of every ten reports filed with the FOS now deal with PPI in some way; either the initial complaint itself or issues with claims management firms. As everyone’s finances get tighter, firms who buy bad debts from credit card companies and loans firms are becoming more aggressive in their tactics to persuade clients to pay up, leading to a the huge rise in complaints against them.

The financial crisis is continuing to affect families on a day-to-day basis, meaning that most people are being extra careful with their cash and notice when hidden charges are applied to their accounts. The cost of living has increased by over 4% in the last year, while most people have had a pay freeze or even had their wages cut.

UK employment figures are continuing to head in the wrong direction, suggesting that the situation is unlikely to change any time soon; and that the Financial Services Ombudsman can expect a lot more complaints before the end of April.