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annual review 2006/07

1 April 2006 to 31 March 2007

who the complaints were about

The charts below show how the new complaints we received during the financial year 2006/07 were spread across the different sectors of the financial services industry.

financial services firms complained about by sector %
life insurance and investment product-providers 37
banks 30
independent financial adviser (IFAs) 12
general insurers 11
building societies 4
mortgage intermediaries 1.5
general insurance intermediaries 1.5
other (including fund managers and stockbrokers) 3

Disputes involving life insurance and investment product-providers fell by 8% compared with the previous year - reflecting the decrease in complaints about mortgage endowments sold by larger insurance companies.

On the other hand, disputes about banks and general insurers both rose by 4% on the previous year - largely as a result of increases in the numbers of complaints about issues such as bank charges, motor insurance and loan protection policies.

While the overall proportion of disputes involving independent financial advisers (IFAs) fell slightly by 2%, the proportion of mortgage endowment complaints against IFAs rose by 4% during the year - following a 14% increase in the previous year. Mortgage endowment complaints involving banks and insurers fell by 18% and 6% respectively.

life insurance and investment product providers – what products were complained about %
mortgage endowments 71
other investments 15
personal pensions 8
insurance products 6
banks – what products were complained about %
mortgage endowments 31
banking services and products 59
other investments 4
insurance products 4
pensions and securities 2
independent financial advisers (IFAs) – what products were complained about %
mortgage endowments 83
other investments 8
pensions 5
securities 2
other 2

financial products most frequently complained about by sector

These charts show how cases involving the products most frequently complained about to the ombudsman service were spread across the different sectors of the financial services industry.

complaints about mortgage endowments %
life insurance and investment product providers 54
banks 19
independent financial advisers (IFAs) 21
building societies 4
other 2
complaints about personal pension products %
life insurance and investment product providers 72
independent financial advisers (IFAs) 16
banks 8
other (including building societies and stockbrokers) 4
complaints about other investment products %
life insurance and investment product providers 63
banks 17
independent financial advisers (IFAs) 12
building societies 3
other (including stockbrokers and fund managers) 5
complaints about banking products and services %
banks 85
building societies 7
mortgage brokers 5
other 3
complaints about general insurance products %
general insurers 66
life insurance and investment product providers 13
insurance brokers 9
banks 7
cash-plan health insurers 2
Society of Lloyd's 1
other 2

how often do financial services firms have complaints about them referred to the ombudsman?

The chart below shows that eight out of ten businesses covered by the Financial Ombudsman Service had no complaints about them referred to us during the financial year 2006/07.

2,637 businesses - 11.5% of all firms we cover - had just one or two complaints referred to us in the year. As in previous years, we again did not charge businesses case fees for the first two complaints during the year. This meant that only around 6.5% of firms covered by the ombudsman service paid case fees in 2006/07.

  • 18,754 businesses (82% of all businesses covered by the ombudsman service) had no complaint referred to the ombudsman during the year
  • 1,942 businesses (8.5% of all businesses we cover) each had 1 complaint referred to the ombudsman during the year
  • 695 businesses (3% of all businesses we cover) each had 2 complaints to the ombudsman
  • 302 businesses (1.3% of all businesses) each had 3 complaints to the ombudsman
  • 670 businesses (3% of all businesses) each had between 4 and 10 complaints to the ombudsman
  • 164 businesses (0.7% of all businesses) each had between 11 and 20 complaints to the ombudsman
  • 136 businesses (0.6% of all businesses) each had between 21 and 50 complaints to the ombudsman
  • 62 businesses (0.3% of all businesses) each had between 51 and 100 complaints to the ombudsman
  • 36 businesses (0.2% of all businesses) each had between 101 and 250 complaints to the ombudsman
  • 22 businesses (0.1% of all businesses) each had between 251 and 500 complaints to the ombudsman
  • 40 businesses (0.2% of all businesses) each had more than 500 complaints referred to the ombudsman during the year

22,823 businesses were covered by the Financial Ombudsman Service as at 31 March 2007

Ten of the UK's largest financial services groups accounted for half of the total number of complaints we received during the year. At the other end of the scale, 225 cases (0.2% of all complaints) related to friendly societies and just six complaints involved credit unions.

how do financial services firms rate the service we provide?

We continue to carry out research to gauge the views of the businesses we deal with - on how we handle disputes and the extent to which we accommodate their particular needs and concerns. During the year we launched a series of quarterly surveys to measure how businesses rate the service we provide.

These surveys cover all sectors of the financial services industry, ranging from sole-proprietor businesses to the largest financial groups. The results of these surveys help us measure our service against a number of "satisfaction indicators". These are benchmarks that reflect what businesses tell us they expect from our service and our own organisational aims and values.

how do financial services firms rate the service we provide? % who agree % who express no view % who disagree
our role is essential for confidence in financial services 50 23 27
our service is good value for businesses who pay the levy/case fees that fund us 35 36 29
our decisions on cases are fair and unbiased 58 24 18
our decisions are consistent 36 23 41
we provide a good dispute-resolution service for businesses 62 23 15

Our surveys of the businesses we cover show that smaller firms - those with fewer complaints referred to the ombudsman service - generally report lower levels of satisfaction than larger firms. This is especially the case where we measure how businesses rate the consistency of our decisions. It appears that smaller businesses, who have only a few cases with the ombudsman service, are more likely to say we are inconsistent than larger businesses, who see a much wider range of our decisions.

During the year we therefore carried out a range of focused research, aimed at getting a better understanding of the views of smaller businesses, many of which have little or no direct contact with us. The way in which smaller businesses view - and are affected by - our decisions and our decision-making process has been a key issue for consideration by our smaller firms' taskforce this year.

image of annual review 2007

This annual review is published in accordance with paragraph 7 of schedule 17 of the Financial Services and Markets Act 2000.