July / August 2011
It's been a bit of a rollercoaster. The first three months of the financial year were the busiest-ever quarter for the Financial Ombudsman Service. As the figures we publish in this issue show, we received over 81,000 complaints - more than double the number we received in the same period last year.
It won't surprise our readers to learn that payment protection insurance (PPI) was the main reason for this substantial increase. During the quarter we were receiving on average over 900 PPI cases each working day. The period also saw both the High Court decision on the PPI judicial review and the decision by the British Bankers' Association not to appeal that decision. During the period of that judicial review, our ability to progress cases against many banks and other financial businesses was seriously hampered, meaning that fewer cases than we had planned were resolved. That had an impact on the 'uphold rate', as inevitably it was the cases that we thought should be upheld that proved most difficult to finalise.
When we come to publish the results for the next quarter, I expect the position on PPI will have changed again. With complaints-handling rules 'waivers' agreed by the Financial Services Authority, the rate of new PPI cases has slowed - for the moment at least. And the efforts by many banks to clear the backlog of cases that has built up should see record volumes of cases closed, and high uphold rates.
But the real challenge - and continuing uncertainty - will not appear until the second half of the financial year. By then, banks and others will be dealing with cases that they received after the judicial review, where there is no dispute that they should be following the ombudsman's approach and the FSA's complaints-handling guidance. Banks and others are already reporting record numbers of new complaints and it will be some time before we see the impact of those on our figures. So it's difficult to tell whether we will be seeing still higher numbers yet - or whether the figures will now start to decline.
In the meantime, to show the impact that PPI is having, we will be splitting out PPI from other general insurance products when we next publish (in September) our complaints data showing individual named businesses. This will enable everyone to see the impact it is having at a business-by-business level.
Elsewhere, at least by comparison, things were relatively stable over the first quarter. We have seen a further welcome decline in current account complaints - and some increase in mortgage-related complaints. And we have split out, for the first time, a growing area of complaints involving home emergency cover - previously included as part of specialist insurance.
But while we are on this rollercoaster of fast-changing complaint numbers, we should exercise some care about interpreting snapshots. We won't really know what it has been like until we reach the end - and get our feet back on solid earth.
Tony Boorman, principal ombudsman and decisions director
(Natalie Ceeney, chief executive and chief ombudsman, is currently on leave)
ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.
The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.