The recent release of the Financial Ombudsman Service [FOS] complaints data for the period ending 31 December 2014 shows a mixed set of results. No wonder the Financial Conduct Authority [FCA] announced last month that it was to “gather evidence on current trends in complaints on Payment Protection Insurance (PPI)”. Sadly, the data continues to show that some financial institutions continue to demonstrate an indifferent approach to complaint handling. Focusing on one product, PPI, the data shows the system is still broken!
More complex PPI claims
Of course there is some good news! Travel back in time to the six month period ending December 2011 and 88% of all PPI claims reviewed by FOS were upheld in favour of the consumer. This showed that financial businesses were rejecting too many genuine claims which should have been settled without wasting FOS resources and time. The percentage in this set of data is 57%, suggesting that overall firms are now more likely to refer cases where there is a genuine difference of opinion, which requires the service of an independent third party dispute resolution service. This trend is supported by the comments of the Chief Ombudsman (Caroline Wayman) who said, when announcing the figures, “we have seen a change in the nature of the PPI complaints people are asking us to resolve – which are becoming increasingly hard-fought and more complex.” The data shows that a number of product providers are clearly trying to resolve complaints internally rather than refer them. For example, only 2% of Coventry Building Society PPI complaints were upheld in favour of the consumer. Likewise, only 6% of Bradford & Bingley plc’s [UK Asset Resolution] PPI complaints were upheld in favour of the consumer.
Firstplus Financial Group plc and others!
However, the data also shows that too many firms are using FOS resources on cases that should be resolved earlier and without FOS assistance. On the basis that FOS stated in October 2014, “By April 2015 we expect that no one will have to wait more than 18 months to hear what we think about their complaint”, putting cases to FOS that should have been settled without their assistance does not appear to embrace the concept of ‘treating customers fairly’. The PPI data shows 5 firms where FOS upholds in favour of the consumer more than 80% of the PPI complaints put to them. They are Express Gifts Limited (99%), CT Capital plc (95%), Firstplus Financial Group plc (87%), HFC Bank Limited (83%) and Lloyds Bank plc (82%).
The FCA has completed an enormous amount of work in respect of strengthening accountability in banking and recently announced a new regulatory regime for senior bankers. A significant focus of the new regime is ‘individual accountability’ within governance structures. Individual responsibility will be supported by a ‘statement of responsibilities’, which will set out who is responsible for the various aspects of a bank’s operations. As the FCA state, “The behaviour and culture within banks played a major role in the 2008-09 financial crisis and in conduct scandals such as PPI mis-selling and the attempted manipulation of LIBOR.” If it takes ‘individual accountability’ to stop further consumer detriment resulting from inappropriate delays in complaint resolution, the new rules are a step in the right direction. With an FCA complaint investigation well underway, the banking community has to get the message soon – how many ‘last chance saloons’ are there?