The latest figures on financial services complaints make interesting reading – and should concern financial services companies and consumers.
Complaints to the Financial Ombudsman Service – which can require finance firms to compensate consumers for monetary loss or poor service – rose by18% in the second half of last year. The grim economic conditions have made banks, insurers and other finance companies less willing to settle consumer grievances, leading to more complaints going to FOS.
A FOS spokesman explains: “We find that businesses in a recessionary environment are more likely to take a more strictly legalistic point of view in dealing with consumers’ complaints. And consumers are more likely to pursue a complaint as they feel the effects of the recession.”
Half complaints upheld
The complaints figures are disturbing. Just over half the complaints are settled in favour of the consumer. But complaints against some companies are much more likely to be upheld.
At the top of the list is Ocean Finance – which promotes itself heavily on daytime tv. Every single finalised complaint in the latest period was resolved in favour of the consumer. Ocean Finance told us it could not comment in the time available.
Welcome Financial Services also has a very high level of complaints found against it: 92%. It failed to respond to a request for an explanation.
MBNA had 85% of its complaints found in favour of the consumer, plus 91% of those against its subsidiary, Loans.co.uk, which no longer trades. An MBNA spokesman says: “Overall, our complaint numbers are falling; we have seen a drop of around 16.5% since the last publication of FOS complaint data some six months ago…… Our figures are broadly in line with those of our competitors…. the complaint levels reflect a tiny fraction of our customers.”
Another company with a high level of cases found against it is the Shop Direct Group, whose brands include Littlewoods, Great Universal, Marshall Ward, Kays and Additions Direct. Its three finance arms had 87%, 88% and 91% of complaints resolved in favour of the consumer.
A spokeswoman responds: “We are fully compliant with all FSA Treating Customers Fairly principles and we receive a very low number of complaints in relation to the 10.5 million customer accounts we hold. We resolve the vast majority of these complaints for our customers within a short timeframe and only a very small proportion of complaints are ever referred to the FOS.”
Of the big banks, Barclays comes out worst. Some 65% of complaints against the bank were resolved in favour of the consumer and 87% of those against its subsidiary, Firstplus Financial, which provides secured loans.
A Barclays spokesman says: “Customer satisfaction is key and the majority of our customers are very satisfied with their banking relationship with us, but we realise things can sometimes go wrong, which is why we have dedicated teams in place to identify and fix problems as quickly and efficiently as possible.”
Working to reduce complaints
But the bank concedes: “Barclays are working closely with FOS to see how we can address the volumes of customer complaints we are receiving and improve analysis to identify route causes.”
The Northern Ireland banks have a better record than the industry average. Only 20% of complaints against AIB/First Trust were resolved in favour of consumers; 37% of those against Northern Bank; 38% against Ulster Bank; and 40% against Bank of Ireland.
But FOS is concerned that many consumers in Northern Ireland do not realize they can complain to it to get bad service corrected, or obtain compensation. A FOS spokeswoman explains there is less awareness of it here than in any other country or region within the UK. She adds: “Financial capacity across the board is lower in Northern Ireland than elsewhere.”
It is something that FOS is keen to put right. So if you are unhappy, start complaining!
The Financial Ombudsman Service can be contacted by phoning 0845 080 1800, or via its website, www.fos.org.uk.
Q. My daughter and son-in-law are having difficulty in finding a mortgage provider. They are buying two plots of land on which they intend to build their own home. One plot costs £95,000 and the other £30,000. Both are professionals in good jobs. They are looking for a mortgage of about £80,000 to complete the purchase of the more expensive site. They have planning permission on the property, which lapses in 18 months. The only mortgage offer they have is from a building society that requires planning permission to last at least five years. Can you suggest an alternative mortgage provider?
A. Ray Boulger, senior technical manager at mortgage brokers John Charcol, says: “I am puzzled by the restriction from the building society. What I would expect the lender to do is to include a condition in the mortgage offer that building work must be commenced by the 18 month deadline. That would automatically mean the offer lapsed when the planning permission did. If your reader’s application to the lender did not make it clear that funds are not required to purchase the land it may be able to reconsider.
“One building society which specialises in self build is The Ecology, and they do lend in Northern Ireland. The Progressive Building Society and Bank of Ireland (NI) will also consider self -build applications. In addition, I would suggest contacting Build Store, which is not a lender but a company specialising in the self-build market. It has special deals with several lenders, all of which allow funds to be drawn down at the various stages in the build process without the normal requirement to have a re-inspection (valuation) done each time, which saves time and money.”