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annual review 2013/2014

1 April 2013 to 31 March 2014

who the complaints were about

businesses complained about - by sector

financial services sector %
banks 79
general insurers 5.5
general insurance intermediaries 5
building societies 4
life insurance and investment product providers 2.5
businesses with a consumer credit licence 1
mortgage intermediaries 1
independent financial advisers (IFAs) 0.5
other (including fund managers and stockbrokers) 1.5

Once again, the proportion of complaints involving banks rose during the year - from 76% last year to 79%. This reflects the high proportion of complaints about payment protection insurance (PPI) that we continued to receive during the year.

The proportions of cases involving all other sectors remained broadly similar to the previous year.

financial products most frequently complained about - by sector

These tables split the new complaints we received into product areas - and show how these complaints were spread across the different sectors of the industry.

complaints about payment-protection insurance (PPI) %
banks 87
insurance intermediaries 5
building societies 4
general insurers 2
other 2
complaints about general insurance (excluding PPI) %
general insurers 58
insurance intermediaries 16
banks 14
life insurance & investment product providers 7
Society of Lloyd's 1
other 4
complaints about banking and credit %
banks 77
businesses with a consumer credit licence 10
mortgage intermediaries 7
building societies 3
other 3
complaints about mortgages %
banks 69
mortgage intermediaries 16
building societies 8
IFAs 2
other (including non-bank mortgage providers) 5
complaints about investment products %
life insurance & investment product providers 46
banks 24
IFAs 13
stockbrokers and fund managers 6
building societies 2
other 9
complaints about pensions %
life insurance & investment product providers 53
IFAs 23
banks 8
other 16

range of case outcomes

We show the outcome of the complaints we handled during the course of the year - split by the different financial products involved. Looking at the outcomes by product, the proportion of cases we upheld in favour of consumers ranged from 2% (in complaints about SERPs) to 80% (in complaints about interest-rate hedging products).

We also refer to the six-monthly sets of data published on our website - relating to around 200 individual businesses that together account for 95% of our complaints workload. More information on how we dealt with the complaints.

This data shows the number of new complaints - and the proportion of complaints we upheld in favour of consumers - for each of these businesses. This uphold rate varied substantially from business to business during the year - from 2% to 94%.

The table below shows the outcome of cases we handled during the year - by financial sector.

% of cases we upheld - by sector %
intermediaries selling PPI 76
banks 62
general insurers 52
businesses with a consumer credit licence 48
independent financial advisers (IFAs) 42
intermediaries selling general insurance 39
intermediaries selling banking and/or mortgage products 37
life insurance and investment product providers 29
building societies 9

how the complaints referred to us were spread across the businesses we cover

  • 2,502 businesses each had 1 complaint referred to the ombudsman service during the year
  • 710 businesses each had 2 complaints to the ombudsman
  • 335 businesses each had 3 complaints to the ombudsman
  • 680 businesses each had between 4 and 10 complaints to the ombudsman
  • 220 businesses each had between 11 and 20 complaints to the ombudsman
  • 190 businesses each had between 21 and 50 complaints to the ombudsman
  • 93 businesses each had between 51 and 100 complaints to the ombudsman
  • 76 businesses each had between 101 and 250 complaints to the ombudsman
  • 42 businesses each had between 251 and 500 complaints to the ombudsman
  • 58 businesses each had more than 500 complaints referred to the ombudsman during the year

The ombudsman service covers around 80,000 businesses that provide all kinds of financial products and services including:

  • 50,000 businesses that offer some form of credit to consumers - and since 1 April 2014 have been subject to the consumer protection rules of the Financial Conduct Authority. Before 1 April 2014 we covered businesses that held a standard consumer credit licence issued by the former Office of Fair Trading.
  • 27,000 banking, mortgage, investment and insurance firms regulated by the Financial Conduct Authority.

The businesses we cover range in size from global financial services groups to sole traders who provide credit as a sideline to their main business. This range in size is reflected in the number of complaints we received about the different businesses we cover. This followed a very similar pattern to previous years.

  • four banking groups accounted for 63% of new cases
  • the next 34% of cases were from 346 businesses
  • the remaining 3% of cases were from 4,504 businesses
    (with 26 or fewer cases each)

During the year around 5% of the total number of businesses covered by the ombudsman service had complaints referred to us.

Four of the UK’s largest banking groups accounted for 324,093 cases - 63% of all the complaints we received.

At the other end of the scale, 237 cases (0.05% of all complaints) related to friendly societies and 108 complaints involved credit unions (222 in the previous year).

In April 2013 we introduced new case fee arrangements - and raised the number of free cases for each business from 3 to 25.

During the year, 4,504 businesses - out of the 4,906 individual businesses that had complaints referred to us - had fewer than 26 complaints. This meant that nine out of ten businesses who had cases referred to us paid no case fees.

how managers working in financial businesses rated our service

  % who agree % who express no view % who disagree
the financial services industry can have confidence in the ombudsman service 57 27 16
our service is good value for businesses
who pay the levy/case fees that fund us
47 30 23
our decisions on cases are fair and unbiased 39 26 35
our decisions are consistent 39 19 42
we provide a good dispute-resolution service for businesses 56 27 17

how complaints handlers working in financial businesses rated our service

  % who agree % who express no view % who disagree
we handle complaints efficiently and professionally 75 22 3
we get to the bottom of complaints and deal with the issues thoroughly 72 15 13
our decisions are fair and unbiased 70 14 16
we settle disputes within an acceptable length of time 52 24 24
general satisfaction with our service 68 14 18

We carry out regular surveys to see how the businesses we deal with rate our service. These surveys cover all sectors of the financial services industry - ranging from the largest financial groups to smaller businesses that only rarely have complaints referred to us.

We focus our surveys on two different groups of people working in financial businesses. One group includes management - for example, heads of compliance, customer service managers, legal advisers and company secretaries. We may not work with these people regularly in our casework. The other group includes the people at financial businesses who handle individual complaints and have a more hands-on relationship with us.

The feedback from these two groups is usually different. For example, during the year 68% of complaints handlers were generally satisfied with our service - compared with 56% of managers. However, we were pleased to hear that managers’ confidence in the ombudsman service increased significantly during the year - from 48% to 57%.

engagement with financial businesses and trade associations

In the chapter called “other work we have done” we describe our approach to sharing our insight with the financial services sector - to help build confidence. This included training and guidance on complaints handling - as well as the work of our advice desk to support businesses.

During the year we asked businesses what they think about the way we share information with them about our work - and which of our support services they value the most.

which of our support services businesses valued most %
ombudsman news 35
our website (including our online technical resource) 26
our technical advice desk 21
other publications (including our quick guides for businesses) 8
events and seminars 10
queries businesses raised with our advice desk %
our approach to insurance complaints 35
our approach to banking & credit complaints 29
our casework procedures 21
our approach to payment protection insurance (PPI) 10
our approach to investment complaints 5

There is more information about the work of our advice desk in the next chapter - “other work we have done”.

For smaller businesses, we also have an outreach team who work closely with trade associations and networks across the country. Our outreach team run meet the ombudsman seminars, where smaller businesses - who are less likely to have direct contact with us - can meet us and ask the ombudsman questions face-to-face.

During the year we hosted events for smaller businesses in:

  • Belfast
  • Birmingham
  • Bournemouth
  • Cardiff
  • Crawley
  • Croydon
  • Derry/Londonderry
  • Durham
  • Edinburgh
  • Leeds
  • Leicester
  • Liverpool
  • London
  • Manchester
  • Milton Keynes
  • Newcastle
  • Norwich
  • Swindon

91% of people from smaller businesses who came along to one of these events said it had given them a better understanding of complaints handling and the role of the ombudsman - which would change the way they approached customer complaints in the future.

For the largest financial services groups - that account for the vast majority of the complaints referred to us - we work hard to maintain constructive relationships at both a strategic and an operational level. This includes making sure that significant caseloads that have already reached us are managed as effectively and efficiently as possible - and that any emerging issues are shared and discussed.

We run an industry panel involving 600 financial services practitioners - as well as officials from over 40 trade associations. We keep in regular contact with the panel through a monthly email newsletter and a series of events, including conferences and workshops on complaints-related topics.

During the year the topics we covered in our events included short-term lending, PPI, assessing household insurance claims, redress for investment loss and consumer credit disputes.

We also work strategically with the financial services industry through more formal arrangements. These include a cross-sector steering group, which is chaired by our chairman and made up of chief executives of major financial services institutions.

At the four meetings we held during the year with this steering group - and at other meetings with senior representatives from the industry - we discussed strategic issues including our funding mechanism and major trends in complaints. Minutes of the various meetings of the steering group are available on our website.