Ombudsman takes on a deluge of complaints

The Financial Ombudsman Service is receiving more complaints than ever

and it received nearly a million complaints in the year to March 2010

Missold payment protection insurance is currently the top area of complaint,

accounting for three out of 10 cases the Ombudsman handles, and up 58 per
cent on 2008/09. The financial services industry has a shocking record on
PPI. As with the endowment mortgage misselling of the 90’s the banks and
other institutions appear to have systematically missold this type of plan. To
make matters worse, many institutions have then systematically turned down.

The Financial Ombudsman is currently finding in favour of 50 per cent of

cases by complainants. With the Ombudsman, 38 per cent of cases were
resolved in three months in 2009/10, and the aim is to push that up to 55 per
cent this year. There is also a fast-track scheme in place but this is usually for
extreme cases such as critical illness or where a family is about to be evicted.
The chief regulator, the Financial Services Authority, also makes a concerted
effort to ensure that institutions do pay promptly all the compensation sums
that the Ombudsman orders them to make but in the majority of instances the
bank has up to 12 weeks to pay.

A recent innovation by Walter Merrick the former chief ombudsman was a

name and shame of the worst offenders. Even though only two sets of
complaints data have been published so far, the behaviour of some firms
seems to be improving. Lloyds TSB Insurance Services, for instance, was
losing 92 per cent of cases before the Ombudsman in the first half of 2009,
but this fell to 57 per cent in the second half. Capital One Bank (Europe) was
losing 91 per cent in early 2009, a figure which fell to 78 per cent in the latter
half of the year.

Even the most responsible firms still lose over 10 per cent of complaints
before the Ombudsman. These include: Liverpool Victoria (11 per cent),
Scottish Friendly (14) and the Prudential (15). The ones with the worst
records include: Eisis (losing 100 per cent of cases), Ocean Finance and
Mortgages (100) and the now defunct Wills & Co Stockbrokers (98).

But, in the specific area of general insurance complaints, some household

names are still losing more than nine cases out of ten in front of the
Ombudsman, including Barclays Bank, Black Horse Ltd (a part of Lloyds
TSB), the Co-operative Bank, Northern Rock (Asset Management), MBNA
Europe Bank and Clydesdale.

Over the next year, the new Chief Ombudsman, Natalie Ceeney, is planning
to research the way the organisation physically communicates with the
outside world in order to meet people's growing expectations in the year
ahead.

The Ombudsman is bracing itself for over a million complaints this coming
year.

In order to deal with the surge in work, the Ombudsman has increased its staff
numbers by about a third over the last few months. Industry sources still
believe that although there is no alternative to the Ombudsman scheme, there
is still a need for change. They believe that staff are not properly trained, and
the scheme is slow, erratic and inconsistent.

Over the coming months the service will be severely tested as they are
currently getting more than 3,500 complaints each working day. The
increasing number of ppi complaints is only adding to this burden.

That said the Ombudsman managed to resolve over a 166,000 disputes

between consumers and financial institutions and compensation was awarded
to more than 50% of complainants.

PPI is still the most common reason for a complaint and basically 3 out of
every 10 new cases is a ppi complaint which is a 58% rise on the year before.
This has also meant that insurance disputes are on the increase although PPI
is the main contributor to this..

The Financial Services Ombudsman was set up in 2000 with the mission to
settle 25,000 disputes a year. This year it says it’s expecting to resolve
200,000 disputes.