One has come to expect a significant increase in the volume of column inches in the national media devoted to financial product mis-selling after the release of the Financial Ombudsman Service [FOS] six-monthly complaint data, but the articles appear to be particularly anti-bank since the release of the most recent data. Sadly, one does not have to consider the data for long to understand why!
For a start, the number of complaints continues to increase. During the last six-month period (ending 30 June 2013), the FOS took on a staggering record number of new complaints which totalled 327,035. This is 15% more than the previous six months and equates to over 2,500 per working day. Of those cases, over 95% came from 195 financial businesses out of over 100,000 businesses FOS covers!
Five financial service groups account for 78% of PPI
Secondly, Payment Protection Insurance [PPI] claims are still increasing. Complaints about PPI made up more than eight out of ten (86%) of the total complaints referred to FOS during the first half of 2013. There were 266,228 new PPI complaints (compared to 211,885 in the last six months of the 2012). I am stating the obvious I know, but that is an increase of over 2,000 per week! yet only five financial services groups account for 78% of all new PPI cases!
Upheld complaint levels cause concern
But the statistic that appears to have sent the financial journalists into a tizzy is the number of PPI complaints that are referred for the ombudsman to find in favour of the consumer. Such referrals cause delay, distress and consumer detriment, so it is of concern that the percentage of PPI complaints upheld in favour of the consumer is 75%. As this compares to 60% in the previous six months period, the national press has been damming in their analysis. One national paper, the Guardian, asked the following rhetorical questions “Are some banks using the ombudsman as their dumping ground for complaints? Is there a cynical calculation that leads some banks to bounce off complaints, on the presumption that many, if not most, people cannot be bothered to take their case further?”
RBS shows improvements
The reality is some financial institutions have made significant progress. For example, the percentage of The Royal Bank of Scotland plc PPI cases resolved by FOS in favour of consumers from 1 Jan to 30 June 2013 was 34%. This shows a significant improvement on their position in the first half of 2012 when their percentage was 87%. However, despite operating to the same FOS guidance the statistics show that other banks are not improving their percentages. The FOS figures show FOS upholds in favour of the consumer in 90% of the Lloyds TSB plc PPI complaints – an improvement on the 98% figure for the period 1 January 2012 to 30 June 2012, but clearly no one should be proud of such figures.
Not surprising then that Natalie Ceeney, [FOS Chief Executive and Chief Ombudsman] says, “Disappointingly we are still seeing cases where businesses are not following our long-standing approach to PPI, resulting in long waits and unnecessary delays for consumers.” While Ms Ceeney continues, “more positively, we are seeing encouraging signs from some major businesses that are starting to recognise the value of getting things right for their customers – with an increased focus on sorting out problems and concerns as quickly as possible” it is equally clear that many financial institutions need a new focus if they are to avoid another press mauling in six months time.