Banking complaints revealed

Financial firms have been named and shamed over consumer grievances. Chiara Cavaglieri reports

Financial firms have been named and shamed for the first time this week over the number of complaints about them. To no one's surprise, the big banks are the worst offenders. Figures from the Financial Ombudsman Service revealed that Lloyds Banking Group accounted for more than 15,000 complaints in the first six months of the year, with Barclays not that far behind.

Of the Lloyds' total of 15,233 complaints lodged, 6,947 concerned Lloyds TSB and 5,804 were about Bank of Scotland. Barclays was the single bank brand topping the complaints table with its customers lodging 8,283 complaints with the ombudsman from 1 January to 30 June.

The majority were about banking and credit services, in particular about charges. Consumers won in almost two-thirds – 61 per cent – of all banking and credit complaints cases. Insurers fared even worse: 70 per cent of complaints were upheld in the favour of consumers.

"It's great that consumers now have a yardstick by which to judge financial providers and hopefully this will force some of the bigger players to smarten up their acts," said Andrew Hagger of Moneynet.co.uk.

The ombudsman has been providing comparative complaints data privately to the larger financial businesses for some time. Explaining why this information is being made widely available, Walter Merricks, the chief ombudsman, said, "Putting this information into the open will give those worst-performing businesses vital encouragement to improve."

Consumer groups have hailed the move as an important victory. The chief executive of Which?, Peter Vicary-Smith, said: "Naming and shaming these companies is a victory for consumers but humiliating for the industry, which has had five years to get its house in order. We'd now like to see the financial sector going further and publishing more data, particularly on brand names and product types."

The figures refer only to complaints that a financial firm hasn't been able to deal with satisfactorily through its own internal procedures. There could have been many thousands more complaints received that were dealt with in-house. The figures published this week concern consumers who have had their complaints rejected by their banks or insurers and who have then appealed to the ombudsman.

The fact that so many complaints have been upheld is damning for financial institutions. "The figures we're interested in are the number of complaints upheld. These shouldn't have got anywhere near the ombudsman," said Dan Moore, a senior researcher with Which?.

The highest percentage of banking complaints upheld were against CitiFinancial Europe, part of the Citibank group, at 88 per cent, followed by Capital One with 87 per cent.

"Consumers can now see that complaints can actually lead somewhere, and that they can get the right result if all they're getting from their banks is a big fat 'No'," Mr Moore said. But the figures show that most financial institutions have incredibly poor complaints dealing procedures.

The Association of British Insurers warned that some of the data could be misconstrued because the complaints categories are too general. General insurance, for example, had the highest percentage of cases upheld, but most of those complaints would have concerned the mis-selling of payment protection insurance, said the ABI, thus skewing the general insurance category as a whole.

"Any such data must be presented in a way that helps consumers make informed choices. Unfortunately, the way that the ombudsman has chosen to present the data doesn't achieve this aim, and may mislead consumers about the performance of individual firms," said Maggie Craig, the ABI's director of consumer strategy.

The British Bankers' Association has also played down the results, claiming that most customers are happy with their banks. "It is inevitable that things go wrong but that's a product of size. In relation to the amount of products, there are few complaints," said Lesley McLeod from the BBA.

Customers may decide to take their business elsewhere. "Quality customer service is more important to many customers than having the very best interest rate," Mr Hagger said.