Financial services complaints soar

The number of complaints made against financial services firms jumped by 15% during the second half of 2010, with more than half settled in favour of consumers, figures showed today.

The Financial Ombudsman Service received a total of 97,237 complaints during the six months to the end of December, up from 84,212 in the previous six months.

The increase was largely driven by the ongoing rise in the number of people complaining about controversial payment protection insurance, with cases relating to the product now accounting for more than half of the ombudsman's workload.

There was also a big increase in the number of disputes being upheld in favour of consumers, with the ombudsman finding against financial services firms in 53% of cases, up from 44% in the first half of the year.

Part-nationalised Lloyds Banking Group remained the most complained-about financial institution, receiving 22,181 complaints during the period - more than one in five of the total and over twice as many as the next most complained-about group.

However, the high level of complaints the group received is likely to reflect the fact that it is the UK's largest bank.

Royal Bank of Scotland, which also received a Government bail- out, received the second highest number of complaints at 8,644, a third more than during the first half of the year, followed by Barclays at 8,256.

HSBC saw the number of complaints it received more than double to 8,238, while Santander also saw a significant increase in disputes referred to the ombudsman, with these rising by 26% to 6,759.

Overall, these five banks accounted for more than half of all the complaints the ombudsman received.

Two credit card companies - Capital One and MBNA - were the sixth and seventh most complained-about firms respectively, with disputes between consumers and Capital One mainly relating to the sale of insurance.

National Australia Group, whose UK brands include Clydesdale and Yorkshire Banks, was the eighth most complained-about firm, with 2,901 complaints, 410 of which related to mortgages.

It emerged in July last year that 18,000 of its customers had underpaid their mortgages due to a computer error by the bank, with some people facing hikes of up to £300 a month.

Although it is not known how many of the disputes related to this issue, the ombudsman said 87% of mortgage and home finance claims were upheld in favour of consumers.

The level of complaints which were settled in favour of consumers by different firms ranged from just 5% to 95% for Eisis, which sells insurance.

Among the major brands, Lloyds TSB, part of Lloyds Banking Group, had the highest upheld rate at 74%, while 73% of disputes were settled in favour of consumers for both MBNA and Clydesdale.

Chief ombudsman Natalie Ceeney said: "The latest set of complaints data continues to show that, while some financial businesses are improving the way they handle their customers' complaints, some regrettably are not.

"Taking the trouble to handle complaints well is an important part of a business's ongoing relationship with its customers - and it is the key to providing really excellent customer service."

Separate figures released today by Santander showed that the group received a total of 195,475 complaints during the second half of the year, down 20% on the previous six months, 165,052 of which related to banking services.

Complaints are only referred to the ombudsman by consumers if they are not happy with the response they receive from the individual firm.