The Financial Conduct Authority [FCA] has recently released consumer complaints data which shows 2,479,029 new complaints were opened against financial services firms between July and December 2013. This clearly shows that huge numbers of consumers are still unhappy with the products they have bought from financial service product providers, but the positive news is there are less unhappy consumers than there were six months ago! The data for the previous six months showed 2,911,154 complaints, so a drop of 15% is a welcome step, but over 5 million complaints in a year shows that the way product providers sell products is flawed.
PPI continues to dominate complaints
It is probably not surprising that Payment Protection Insurance [PPI] complaints top the league table of most complained about products, but the detailed analysis shows that PPI, although catching most of the headlines, is just one of the many complained about products. In fact, PPI now only accounts for 56% of all complaints (it was 62% during the first half of 2013). The list includes, in order of the volume of complaints after PPI, other general insurance products, current accounts, credit cards and savings/other banking products. Although the number of complaints in some product categories have fallen the FCA data release shows that complaints about other general insurance products and current accounts are increasing. The top five products in terms of number of complaints opened in the second half of 2013 are:
- PPI– 1,390,756 (a 22% decrease on the first half of 2013)
- Other general insurance products – 321,812 (a 3% increase on the first half of 2013)
- Current accounts – 303,110 (an 8% increase on the first half of 2013)
- Credit cards – 140,829 (a 14% decrease on the first half of 2013)
- Savings (including cash ISAs) and other banking products – 82,353 (a 16% decrease on the first half of 2013)
Over £5 billion in consumer redress!
While the number of complaints remains at staggering levels, the value of redress is equally overwhelming. The total amount of redress paid in the second half of 2013 was £2.65bn, an increase from £2.55bn in the first half of the year. 94% of all redress payments were paid for GI and pure protection products which include PPI. So in 2013 product providers paid over £5bn in consumer redress! This reinforces the conclusion that the way product providers sell products is flawed.
Dealing with complaints properly within 8 weeks?
It also appears that product providers are recognising that dealing with complaints properly is an important part of their business and that potential customers not only judge them by the mistakes they may have made in the past but are ever more inquisitive about how they resolve matters when things go wrong. It is an embarrassing fact that overall, at the half year end, only 66.1% of complaints were resolved within 8 weeks (only 46% of complaints relating to general insurance & pure protection, which includes PPI, were resolved in 8 weeks). The overall percentage for the half year period at the end of 2013 had improved to 93%.