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9 June 2021

Financial Ombudsman Service (“FOS”) have published their annual complaints data which provides an important insight into the work FOS have undertaken over the past financial year. The data shows the volume of complaints received, resolved and complaints upheld.

It is important to note that this reporting period reflects the time of the global pandemic which FOS noted added a ‘heightened demand’. This increase in demand saw a significant number of new complaints that reflect historic lending.

PPI remains the single most complained-about product, although it accounted for as 15% of complaints which is significantly down from 78% at its peak in 2013/14.

There were several key themes which FOS identified as potentially avoidable causes of complaints. These include;

  • Poor communication, not meeting or setting customer expectations.
  • Failure to address individual circumstances and failing to recognise potential consumer vulnerability.

FOS recognised that the pandemic and its impact on businesses is unprecedented but that the fundamentals of customer service matter more than ever.

Banking and credit complaints saw a 66% increase from the previous period with 57,571 complaints relating to unaffordable lending. The overall uphold rate of complaints decided by FOS was 46% with the highest uphold rate of 83% relating to home credit.

The number of new complaints relating to unaffordable lending may indicate that firms are not correctly identifying signs of financial difficulties. It’s imperative that firms have effective processes in place to identify and monitor potential financial difficulties and ensure that appropriate actions can be taken with customers to negate any potential consumer harm.

Insurance products and issues (excluding PPI) saw a 36% increase since 2019/2020. The product receiving most complaints was car insurance, whilst the most complained about issue was claims being denied. The overall upheld rate was 31%, with the highest uphold rate of 94% against special event insurance.

FOS identified that many of these complaints could have been avoided by providing clearer guidance to consumers. Leah Nagle at Ombudsman commented;

“Many complaints could be prevented by insurers providing clearer guidance about the information that consumers need to disclose during the sales process – particularly for sales taking place via price comparison websites.  Insurers could also make the consequences of customers misrepresenting, or not telling them about important changes, much clearer. Some people we hear from just haven’t understood how serious the consequences can be.”

Complaints against claims management companies (“CMCs”) saw a 29% decrease since the previous 2019/2020 period with the most complained about issues being in relation to administration or customer service. Complaints against CMCs saw a 40% uphold rate.

Again, FOS highlighted that clear communication is key to avoiding complaints. Geoff Futer at FOS said;

“Setting out clearly what you’re going to do, doing it within a reasonable timescale, and updating your customer about what you’re doing are key. And where things have slipped –  or automated processes have created ambiguity – recognising that, and treating customers as individuals when responding to their complaints, can go a long way to restoring confidence and avoiding the escalation of those complaints to our service.”

The key themes throughout the data demonstrate a need for firms to communicate clearly with customers. It is important that firms review and analyse the complaints that they receive and act on potential trends and causes by implementing business improvement programmes.

By Ian Beardmore

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