Out-Law News 3 min. read

Complaints tables name and shame financial firms


Five banking groups accounted for over half of all new complaints received by the Financial Services Ombudsman (FOS) during the first half of this year, according to figures published for the first time this week.

Over the same period, 70% of consumer complaints about general insurance and 61% of cases concerning banking and credit products were upheld by the ombudsman in the consumer's favour.

The FOS, which handles consumer complaints against businesses that provide financial services, announced its intention to publish firm-specific complaints information in March this year.

The figures are organised into five broad products types: banking and credit; mortgages and home finance; general insurance/pure protection; investments; and life, pensions and decumulation (retirement income). Each of the 142 firms included in the list is identified by its official business name and any larger financial group to which it belongs. But the tables do not include brand names, which may be different.

Leading the table of new complaints are the banks, headed by Barclays Bank with 8,283 new complaints received, followed by Lloyds TSB with 6,947 and Bank of Scotland (now part of the Lloyd's group) with 5,804.

Most new complaints fall within the banking and credit and general insurance categories, reflecting recent high-profile consumer campaigns about bank charges and payment protection insurance (PPI). But the number of new cases is also likely to be influenced by the size of the business involved. Experts consulted by the FOS, however, have not yet agreed how size or market share should best be taken into account.

The table of resolved cases shows that, between 1st January and 30th June, 59% of complaints across all product types were upheld. 23 firms had over 70% of general insurance complaints decided against them. For 16 firms, the figure was over 90%. Normally, the Ombudsman would expect to decide between 30% and 40% of cases in the consumer's favour.

Aggregate complaints figures published by the FSA earlier this month, however, showed that, from 2006 to 2008, the number of complaints reported to the regulator by firms increased by 5.7% and the proportion of complaints upheld by firms in the consumer's favour remained fairly stable at around 40%. 

The FSA data, however, does not provide figures for individual firms. The regulator is currently consulting on proposals that would require firms receiving the most complaints to publish their own complaints data from July 2010. The regulator would then consolidate this information with anonymous complaints data from all other firms and publish an overview of the sector twice a year.

The new FOS complaints tables have been welcomed by consumer group Which? Chief executive Peter Vicary-Smith said:

“Naming and shaming these companies is a victory for consumers but humiliating for the industry, who have had five years to get their houses in order. We’d now like to see the financial sector going further and publishing more data, particularly on brand names and product types.

“Over half of the complaints to FOS are upheld in favour of the consumer; they should have been dealt with by providers' internal procedures before reaching that point.”

But Maggie Craig, Director of Consumer Strategy at the Association of British Insurers (ABI) warned that the information could be misleading:

"It’s absolutely right that consumers should know about the performance of firms who look after their insurance and investment needs, and complaints handling is an important part of that," she said.

"But any such data must be presented in a way that helps consumers make informed choices. Unfortunately, the way that the FOS has chosen to present the data doesn’t achieve this aim, and may in fact mislead consumers about the performance of individual firms. For example, consumers can’t compare performance by sector or by product," said Craig.

To put the information more into context, the ABI is to publish data showing the number of complaints according to different types of insurance, such as motor, home and life insurance.

"This is the type of information which will help consumers to make informed choices about where to buy their financial products and thus inspire companies themselves to improve their performance "said Craig. "We hope that in the future, both the FOS and the FSA will take this on board and adapt the way that they present complaints data.”

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