ombudsman service publishes annual review of personal finance disputes

The Financial Ombudsman Service – the independent organisation that settles disputes between consumers and financial companies – today publishes its annual review for the 2008/09 financial year. The review shows that during the year, the ombudsman:

• Handled 789,877 consumer enquiries and a record 127,471 new complaints.
• Resolved 113,949 disputes – a 14% annual increase – with our involvement resulting in compensation for consumers in 57% of cases.
• Saw the number of complaints about mortgages, credit cards and consumer credit rise by 34%, and insurance disputes increase by 84% – while complaints about mortgage endowments fell by more than half.

While half of the total number of disputes related to six of the UK's largest financial services groups – broadly in proportion to the amount of business they carry out with consumers – more than 95% of businesses covered by the ombudsman service had no complaint referred to the service during the year.

Sir Christopher Kelly, chairman of the ombudsman service, said:

The financial world is a very different place now from a year ago – and the ombudsman, like everyone else, has been affected by the economic turmoil. For us it has involved dealing with a significant increase in the number of complaints arising from the impact of the worsening financial climate.

As businesses tighten their belts – and the credit crunch leads to increased financial difficulty for many consumers – we are gearing up to deal with further volatility in complaint volumes.

Statistics from the annual review show:

• A three-fold increase in complaints about payment protection insurance (PPI) – following a five-fold increase in the previous year.
• Complaints about motor, household and travel insurance rising – but complaints about health insurance levelling off.
• Complaints about investment bonds more than doubling – but pension complaints falling by 9%.
• 26% of cases referred on behalf of consumers by commercial claims-management companies (a 40% increase on the previous year).
• The proportion of complaints from "blue-collar" workers ("C1/C2") increasing by 17% – with complaints from people from professional backgrounds ("white-collar") falling by 18% in the last two years.
• 74% of adults said they had heard of the Financial Ombudsman Service – with awareness of the ombudsman highest in the North and South East and lowest in Northern Ireland.
• The average cost of resolving a dispute at the ombudsman service has fallen 4% year-on-year to £508.

annual review 2008/09 [PDF opens in new window]

(OFT) OFT to focus investigation into unarranged overdraft charges on three banks

The OFT has announced that it is to streamline its investigation into unarranged overdraft charges by focusing on the terms of three banks in particular. The aim is to progress the case in the shortest and most efficient way possible.

The OFT believes that the terms of the three selected banks provide the best representative selection of all the banks' unarranged overdraft charging terms, and therefore the outcome of this more focused investigation will be relevant to the assessment of other banks' terms.

The investigation will concentrate initially on the charging terms of Lloyds TSB, HSBC and Clydesdale. The OFT has written to all the banks under investigation to outline this decision.

It should not be assumed that the OFT is more or less likely to find the terms of these banks' unfair than those of the other banks. The investigation into the other banks' terms is merely on hold and the OFT has stressed that no banks' terms have been given a clean bill of health.

The OFT expects to reach final conclusions on fairness later this year.