Out-Law News 2 min. read

Complaints about big banks down, but insurance complaints up, says regulators


The number of complaints opened against each of the UK's biggest banks dropped in the second half of 2012, however complaints relating to payment protection and other insurance products are still on the increase, the regulator has said.

Figures published by new regulator the Financial Conduct Authority (FCA) show a 1% increase in the number of complaints made to financial services firms between July and December 2012 on the first half of the year. There were 3,422,384 complaints in total over this period, according to the data.

The FCA said that complaints decreased in the second half of the year for all types of financial products, other than those classed as 'general insurance and pure protection'. Complaints in this category, which includes payment protection insurance (PPI) increased by 5%. PPI accounted for 63% of the total number of complaints, or 2,170,537 complaints, according to the data.

The figures were based on data published on the websites of financial services firms. The FCA requires firms who receive more than 500 complaints in a half-yearly reporting period to publish the data.

"Greater transparency drives greater competition, and the publication of the complaints data lays bare the track record of the UK's financial institutions when it comes to resolving customer conflicts," said FCA chief executive Martin Wheatley.

"When I meet with the bosses of the financial institutions they frequently tell me that they don't want to be at the top of the table, which means they strive to improve both their sales and complaints handing processes. Not only does our data help consumers compare and contrast their current bank or lender, but it also boosts competition amongst firms too," he said.

PPI is intended to cover repayments due on loans or credit cards for people who cannot afford their repayments because of an accident, sickness or death. Regulators have found that these products have been "widely mis-sold" to consumers in the past, in some cases because they were not told that a policy was optional or because their own circumstances were not covered by the policy that they took out.

Banks and industry leaders, including John Cridland of the CBI, have called on the Government to introduce a time limit on complaints against banks in relation to PPI mis-selling. Earlier this year the Financial Services Authority (FSA), which was succeeded as conduct and compliance regulator by the FCA this month, said that it was "prepared to consider the merits" of a proposal for a limit, preceded by an industry funded advertising campaign. However, it said it would "need to be convinced that any proposals would be in the interests of consumers", and that there would be no changes to the rules without "full public consultation".

Barclays was the most complained about financial services firm in the second half of 2012, according to the FCA data. Lloyds TSB, Bank of Scotland, MBNA and Santander UK completed the top five most complained about firms. Each of the five received fewer complaints in the second half 2012 than they did in the first half of the year; particularly Lloyds TSB where complaints dropped by 19%. The FCA noted that "firms with the largest number of customers will often have the largest number of complaints".

Complaints not related to PPI were most likely to be about current accounts, general insurance products such as travel or motor insurance, credit cards, savings and other banking products, according to the data. The number of complaints about banking products fell by 12% in total, to the lowest half-yearly number of such complaints since the second half of 2006, the FCA said.

Consumers received compensation amounting to £2,946 million over the second half of the year, down from £3,169 million in the first half of the year, the FCA said.

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