Big increase in credit broking and packaged account complaints to ombudsman
New figures from the Financial Ombudsman Service also show PPI claims finally dropping off.
The Financial Ombudsman Service has released its case figures for the third quarter of 2014/15 (October, November and December 2014), which show payment protection inusrance (PPI) cases falling but a sharp increase in complaints about credit broking and packaged current accounts.
The PPI saga seems to be finally drawing closer to its end, with around 160,000 new cases opened so far this year, compared to nearly 400,000 in 2013/14. While that still represents an awful lot of incoming work, it’s a significant decrease.
At the PPI scandal’s peak in 2013, 12,000 new cases were being received a week, but now that figure is closer to 4,000.
These cases are taking, by far, the most significant proportion of the ombudsman's resources, as they make up around two-thirds of the total complaints lodged. There have been over 16,000 judgements made so far this year in PPI cases, out of which 59% were upheld in favour of the customer.
Some complaints are settled before the ombudsman makes its decision, but by the end of this financial year the service says it aims to have resolved a staggering 320,000 PPI complaints.
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Increases elsewhere
Credit broking and packaged bank accounts are two areas that have experienced a dramatic increase since last year, with enquiries jumping by nearly 10,000 each, both to a total of around 16,000. This has resulted in an extra 6,000 cases brought against packaged bank account providers, but only an extra 167 so far against credit brokers.
Packaged bank accounts are paid-for accounts that come with extras such as home or vehicle insurance. While the ombudsman says there were some poor and unacceptable sales practices in play, it argued the benefits can be useful and cost effective for many. However, it wants customers to be given clear information and be aware of alternative, free, current accounts.
Meanwhile, while 16,358 enquiries were received by the ombudsman on credit brokers, although only 816 cases were opened in the last three quarters. There has been an increase in brokers charging fees with the promise of getting people credit via a loan or credit card, only for some to pocket the fee without delivering anything.
Of the 163 cases where a judgment has now been passed, 64% were upheld.
The bigger picture
So far this year, the ombudsman has upheld 53% of 32,402 adjudicated complaints, down on last year’s 58% rate. Due to sheer volume, this has been tipped significantly by the dropping success rate of PPI claims, of which 59% have been upheld this year compared to 66% in 2013/14.
These numbers should be appraised cautiously, as one quarter of the year remains, but it would seem that many more cases are being judged in favour of financial providers this year.
One reason for this is an increase in spurious claims by fee-charging claims management companies.
How to complain to the ombudsman
The Financial Ombudsman Service exists to offer an alternative dispute resolution service. It is a neutral mediator where people can bring their complaints to if their bank, or another financial institution, has treated them unfairly.
The target of the complaint must be first given the chance to respond to a complaint through their own procedures, before the ombudsman can be contacted, and a ‘letter of deadlock’ must be issued to the customer. To learn more about the procedure, read How to complain to the Financial Ombudsman Service.
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