Annual complaints data and insight 2020/21

Data from 1 April 2020 to 31 March 2021. The difference between the sum of sector totals and total new complaints reflects the very small number of cases that hadn’t been categorised as a product in our new taxonomy at the end of the year.

2020/21 brought previously unimaginable challenges for UK businesses and consumers. The Covid-19 pandemic’s impact on lives and livelihoods is reflected in the wide-ranging complaints the Financial Ombudsman Service received over the past year, as well as the significant increase in non-PPI complaints.

In total, the service received nearly half a million enquiries. In many cases, it was able to help consumers and businesses resolve a problem without it becoming a formal complaint – signposting to the information they needed, or giving a steer on a fair way forward.

The complaints the service went on to investigate numbered well over a quarter of a million. Excluding PPI, this was a 58% increase on 2019/20.

Adding to the heightened demand created by the pandemic, a significant number of these new complaints continued to reflect historic lending. While PPI remained the single most complained-about product, it accounted for just 15% of complaints, down from 78% at its peak in 2013/14.

While the service resolved nearly all the number of complaints it had planned to before the pandemic, the record number of new complaints it received has put pressure on waiting times. Looking ahead, we will continue to take action to ensure we’re giving our answers as soon as possible. It’s at times like this that the Financial Ombudsman Service has an even greater role and responsibility in supporting millions of consumers and firms around the UK.

Ensuring complaints don’t reach us unnecessarily is an important part of the picture. That’s why, as the pandemic unfolded, the service has shared information and resources for businesses and consumers alike, to help stop problems and disputes arising.

Building on this, the analysis below highlights some of the key issues involved in the complaints the service saw during 2020/21, how it resolved them fairly, and how they might have been prevented.

While the pandemic is unlike anything businesses and their customers have been through before, it's clear the fundamentals of customer service matter more than ever.

• First, many complaints might have been avoided with better communication. While the pandemic's impact on businesses’ operations has often been unavoidable – and is something the service has felt too – managing customers’ expectations effectively can help generate goodwill and pragmatism, rather than distrust and frustration.
• Attention to individual circumstances is also essential. Where complaints have been upheld, it’s often been because the business hasn’t addressed what’s gone wrong, or suggested a way forward that’s right, for that particular customer.
  
  This becomes even more vital in light of the potential for detriment generated by the pandemic. The FCA's most recent research is stark: reversing a previous downward trend, more than half of all UK adults, 27.7 million people, have characteristics of vulnerability.
• Beyond the direct repercussions of Covid-19, its impact on consumers’ lives, their finances, and what they need from financial services will continue to develop.

We are committed to playing our part in preventing complaints and unfairness arising – whatever the challenges ahead.

Total new complaints: 170,648

103,070 in 2019/20 – 66% increase 

Most complained-about product: current accounts – 23,678 new complaints

Most complained-about issue: unaffordable lending – 57,571 new complaints 

Overall uphold rate: 46%

Highest uphold rate: home credit – 83%

Lowest uphold rate: lifetime mortgage (hybrid) – 2%

Banking

Preventing complaints: an ombudsman’s view

Many banking complaints go to the heart of a bank’s relationship with their customer. Taking into account an individual customer’s circumstances resolves most issues we see. Quite often we see that a bank has relied on a system or a process – when picking up the phone, or seeking information direct from the customer, would have made all the difference in finding a personal solution to a problem that’s cropped up.

Simon Coe, ombudsman

In the year as a whole, we received more than 18,000 complaints from victims of fraud and scams. About 40% of the cases we saw involved authorised payment fraud (including authorised push payment (APP) scams) – and we continued to uphold a high proportion of these complaints. Although many banks signed up to the Lending Standards Board's Contingent Reimbursement Model (CRM) code in May 2019, we’re still seeing it applied inconsistently. The code sets out clear expectations of firms. While consumers’ actions in some cases mean they might not be eligible for a refund, if someone has been a victim of an APP scam, firms' starting point should be to reimburse them.

The ideal situation is that businesses prevent scams at source, so fraudsters' accounts are identified and closed before they can be used. Where scams do happen, we’ve been clear that we expect businesses to apply relevant rules and guidance – including, but not limited to, the CRM code. If complaints arise, businesses should draw on our guidance and past decisions to reach fair outcomes, without the need for our involvement. We’ve previously published information for firms and consumers about the fraud-related complaints we’re seeing.

The pressure that banks’ operations came under due to Covid-19 was reflected in the high levels of complaints we saw about administration or customer service. Where we upheld complaints, it tended to be because businesses needed to communicate more effectively, managing customers’ expectations about delays or service changes. Where it’s been clear to us that banks have tried to do their best in challenging circumstances, we’ve encouraged consumers to be pragmatic and understanding.

Together, complaints brought to us about online banking and payment (or "e-money") accounts increased 226%, highlighting the pandemic's impact on how consumers access and move their money. We heard from consumers who'd had difficulties accessing their accounts, with some unable to get through to the business to try to resolve the problem. Some consumers hadn’t received funds into their e-money accounts as expected, or hadn’t received items they’d paid for despite having funds taken from their accounts. It’s important firms ensure customers aren’t negatively impacted by the shift towards online services or issues accessing them – especially those whose circumstances mean they may be vulnerable.

The pandemic led to thousands of holidays and events being cancelled. We saw complaints reflecting consumers’ attempts to reclaim money through credit providers under Section 75 of the Consumer Credit Act – or often through the “chargeback” process, where people had asked their card providers to reverse a transaction. Together, we received 72% more complaints in these areas, including those about delays in processing claims. We expect to see card providers follow the latest guidance from the FCA that asks firms to respond to and process claims in a reasonable timeframe.

Borrowing

Preventing complaints: an ombudsman’s view

Throughout the lending relationship, it’s important firms stay alert to signs their customers may be struggling. In the high-cost lending sector, if signs of existing financial difficulties are overlooked at the outset, borrowers can end up being given access to expensive credit that they can’t afford. In more mainstream lending, problems more often arise where customers are left to ‘service’ interest costs over a long period of time without ever demonstrating that they are able to reduce the amount they owe.

John Wightman, ombudsman

In 2020/21 we saw a substantial increase in complaints linked to borrowing. As our quarterly data releases showed during the year, this included a high number of complaints about guarantor loans and home credit, including from claims management companies (CMCs). These were typically linked to historic lending, with consumers concerned they’d been lent money they never could have afforded to repay. We decided in consumers’ favour in a significant majority of cases.

We’ve continued to direct lenders to established rules and guidance on lending and handling complaints. We also provide a range of resources to help them. We also provide a range of information about our approach, case studies and ombudsmen’s decisions. We work closely with the FCA to ensure a coordinated approach to addressing consumer detriment in this area. Unfortunately, we’ve once again seen lenders encounter financial difficulties themselves due to previous lending decisions – reducing customers’ likelihood of receiving full redress. 

According to the FCA’s latest Financial Lives survey, 38% of adults have seen their financial situation worsen because of Covid-19 – and during 2020/21 we saw an increase in complaints about banking and credit that involved financial difficulties. While government support remains in place to help people who’ve experienced shocks to their income, all firms involved in lending – from alternative lenders to mainstream banks – need to maintain their focus on this area looking ahead.

In our experience, effective responses to customers’ concerns about debt combine clear, empathetic communication with flexible solutions that reflect each customer’s individual needs. This includes complaints where people’s homes are at risk. As lenders are once again able to enforce repossessions, this should be seen as a last resort once all other avenues have been explored.

At the same time as helping those in difficulty, businesses need to consider whether customers’ concerns about current repayments could highlight an issue with the original lending, such as whether they'd ever have been able to repay the debt in a sustainable way. And it’s essential that businesses don’t make further lending decisions that result in consumer detriment.   

The impact of Covid-19 restrictions on smaller UK businesses has also been reflected in our casework (see also our insurance insight below). Following the introduction of emergency loan schemes, complaints linked to these accounted for the majority of the increase in business lending complaints. Around half of these cases were rooted in unhappiness over delays to applications, with a further half about declined applications.

Again, better communication can play a key role in mitigating complaints – and in view of these loans' importance to businesses’ future, empathy is especially important. Transparency and clarity on lenders’ part, helping small business customers know how things stand on both timeframes and the outcome of applications, can also reduce the likelihood of disputes arising. Lenders should consider whether to pay compensation to reflect the upset and inconvenience caused by any failings. We will be publishing more information about the complaints we’ve seen from small businesses, two years after our remit expanded.

Total new complaints: 44,487

32,637 in 2019/20 – 36% increase 

Most complained-about product: car insurance – 10,899 new complaints

Most complained-about issue: claim declined – 17,018 new complaints 

Overall uphold rate: 31%

Highest uphold rate: special event insurance (wedding insurance) – 94%

Lowest uphold rate: card protection insurance and personal accident insurance – 10%

Preventing complaints: an ombudsman’s view

Many complaints could be prevented by insurers providing clearer guidance about the information that consumers need to disclose during the sales process – particularly for sales taking place via price comparison websites.  Insurers could also make the consequences of customers misrepresenting, or not telling them about important changes, much clearer. Some people we hear from just haven’t understood how serious the consequences can be.

Leah Nagle, ombudsman

At the end of the first quarter of 2020/21, when we shared early insight into complaints linked to the impact of Covid-19, travel and business interruption insurance together accounted for 43% of these cases. Over the year as a whole, we saw an increase of 240% in complaints about travel and special events insurance, where consumers had been affected by cancellations and restrictions.

As we highlight in our guidance, most travel insurance policies don’t provide cover for losses recoverable from elsewhere – so we check whether consumers have a right to recover losses from their airline, tour operator, bank or credit card company, before considering whether an insurer has acted fairly in declining a claim. We expect insurers to take a pragmatic view of decisions not to travel or to cut short a trip. Where this decision was made earlier than insurers might usually expect, they should consider whether travel advice or restrictions would have meant the consumer would have ultimately had to cancel their trip anyway. If an insurer hasn’t been disadvantaged, we’re unlikely to think it’s fair to decline a claim that would otherwise have been covered.

Complaints about wedding insurance – which had the highest uphold rate across all products in 2020/21 (94%) – saw a large year-on-year increase, with hundreds of consumers complaining about how insurers handled their claims. While it’s right insurers consider the policy terms and whether any exclusions apply, we still expect insurers to take into account unprecedented situations, such as the one created by Covid-19, when deciding whether to rely on an exclusion.

We also heard from consumers with private medical insurance, who were unhappy about being unable to access treatment they wanted due to limitations on health services.

At the start of the pandemic, we heard from small businesses complaining that insurers had turned down their claims under business interruption insurance policies. Following the FCA’s decision to take a test case through the courts to resolve some of the complexities involved, the Supreme Court’s judgment in January 2021 provided clarity on policy wordings relevant to some complaints. Many insurers have been revisiting rejected claims, and we'll consider how the judgment applies to the individual circumstances of any complaints we receive.

Looking forward, the nature of insurance complaints arising from the pandemic continue to evolve. In the context of changing restrictions and guidance, it’s essential insurers are completely clear about what policyholders will be covered for. As we set out in our insight focus on misrepresentation in insurance, it’s equally important consumers take care over giving insurers the right information, and ensure they understand what they’re covered for when buying or renewing policies. 

Total new complaints: 20,854

10,920 in 2019/20 – 91% increase. From 2020/21 term assurance is categorised within investments, rather than insurance, for data reporting purposes. This change has contributed to the size of the year-on-year difference.

Most complained-about product: self-invested personal pensions (SIPPs) – 3,021 new complaints

Most complained-about issue: administration or customer service – 8,483 new complaints 

Overall uphold rate: 22%

Highest uphold rate: self-invested personal pensions (SIPPs) – 56%

Lowest uphold rate: mortgage endowments (unit-linked and with profits); whole-of-life assurance (critical illness only); and over-50s' plans – 6%

Preventing complaints: an ombudsman’s view

Consumers often don’t understand that their pension value is continuously fluctuating because it relates to underlying assets. Businesses could do more to explain this. For example, when requesting to take benefits, switch funds or transfer their pension, customers should be clearly informed that the value they will get might be higher or lower than when they make their request. Explanations of how a particular product or process works should be easily understandable for the lay person.

Nina Walter, ombudsman

Complaints about investments and pensions made up just 8% of the new complaints we saw in 2020/21. Even so, these remain among the most high-value financial products people hold – and in the event of changes in their value, our experience suggests that clear communication can make the difference in preventing complaints. Often, we felt that businesses could have done more in the first instance to explain why the value might change – and had then missed further chances in responding to customers' complaints to explain why something had taken longer than expected, and to provide a timeline of what had happened.

While many firms have continued to deliver their services in challenging circumstances, we’ve seen 50% more complaints about pension and investment providers' administration or customer service – such as those centred on delays and communication. In contrast to other transactions, changes to the mix of investments and pensions can’t be achieved immediately, with the timescale influenced by a range of factors. Again, we saw instances of firms responding to complaints about delays with either little or no explanation about the timescales involved and any impact of Covid-19 on these.

We continued to see a large number of complaints against self-invested personal pension (SIPP) operators – and upheld a majority of these. The consumers involved previously had conventional personal or final salary pensions, and had switched or transferred these to SIPPs in order to make unusual unregulated investments. In this type of case, many of the transactions involve one or more unregulated businesses, and the complaint is about the role played by the SIPP operator in its acceptance of the investments involved, and/or of introductions from the unregulated businesses involved.

These are generally referred to as “due diligence” complaints, as they involve the checks that were carried out (or should have been carried out) by the SIPP operator on the investments and/or introducers involved. We’ve seen many examples of these transactions resulting in the loss or likely loss of consumer’s pensions – illustrating the potential risk to consumers in dealing with unregulated businesses and making unregulated investments. SIPP operators receiving these complaints should give careful consideration to our published decisions on similar complaints.

The FCA’s latest Financial Lives survey found that 14% of adults who haven’t yet retired say that Covid-19 has affected their retirement plans, and that people are reporting receiving more unsolicited approaches involving pensions, investments, and retirement planning than they did before Covid-19. While consumers should be cautious and aware of the risks, it’s important regulated providers communicate proactively with their customers about their options and the risks involved in investing. We’ve continued to share insight from complaints we’re seeing with the FCA to help inform its own activities.

Total new complaints: 42,040

122,153 in 2019/20 – 66% decrease

Most complained-about issue: mis-sale – 36,210 new complaints

Overall uphold rate (excluding complaints linked to the Plevin judgment): 13%

Preventing complaints: an ombudsman’s view

PPI mis-selling is a historic issue, as most businesses stopped selling new policies some time ago. Following the FCA’s PPI deadline, we’re seeing fewer complaints – and businesses can prevent further complaints being referred to us by learning from our past decisions, and understanding and following our well-established approach to these cases.

Simon Leach, ombudsman

Businesses dealt with extremely high volumes of customer enquiries and complaints in the run-up to the FCA’s complaint deadline of 29 August 2019. Our conversations with businesses at that time suggested it would take them many months to work through these cases – and at the beginning of 2020/21, we forecast that we might receive up to 100,000 complaints over the year. By the end of March 2021, however,  we’d received fewer than half that volume – meaning PPI accounted for just 15% of our casework, down from 78% at its peak in 2013/14.

Continuing the downward trajectory we’ve seen over recent years, we upheld 17% of PPI complaints. Reasons we did uphold complaints included new information coming to light at at a later stage, or there being something about the consumer's circumstances that the business hadn’t placed much weight on, but which we decided meant PPI wasn’t right for them.

We continued to see examples of businesses and CMCs not engaging effectively – leading to complaints being referred to us that could have been settled much sooner without our involvement. The need for these parties to engage with each other constructively – with the shared aim of getting a fair outcome for their mutual customer – is applicable to other areas where we’re seeing high CMC involvement.

We’ve also seen complaints where the consumer or CMC and the business haven’t agreed about when the complaint was made – and importantly, whether it was received before the deadline. When looking at these disputes, we needed to carefully weigh up evidence from both sides about whether, and if so when, a complaint was made. We also received small numbers of complaints to which the deadline doesn’t apply: those about insurers’ decisions to reject claims people had made on PPI policies, including situations where consumers’ circumstances had changed due to Covid-19.

Since 1 April 2019, we’ve been able to look into complaints made by consumers about claims management companies (CMCs) they’ve used to make complaints on their behalf. We report separately on volumes of complaints we’ve received and resolved about CMCs on our CMC website.

Total new complaints about CMCs: 1,113

1,558 in 2019/20 – 29% decrease

Most complained-about CMC activity: PPI claims – 751 new complaints 

Most complained-about issue: administration or customer service – 554 new complaints

Overall uphold rate: 40%

Preventing complaints: an ombudsman’s view

Setting out clearly what you’re going to do, doing it within a reasonable timescale, and updating your customer about what you’re doing are key. And where things have slipped –  or automated processes have created ambiguity – recognising that, and treating customers as individuals when responding to their complaints, can go a long way to restoring confidence and avoiding the escalation of those complaints to our service.

Geoff Futer, ombudsman

Reflecting the lower volumes of complaints we received about PPI, we received 30% fewer complaints about how CMCs handled PPI claims. Given that PPI has been by far the biggest issue involved in our CMC casework to date, this led to a 29% decrease in complaints against CMCs overall.

Despite this decrease, PPI claims-handling remained our most complained-about CMC activity. Consumer concerns ranged from CMCs having submitted claims after the FCA’s PPI deadline, to unhappiness about the fees and commission charged by the CMC in question. CMCs, like other businesses, have seen their operations impacted by the pandemic, which led to some consumers not being updated on their claims. As in other areas, clear communication will help prevent complaints reaching us unnecessarily.

Going forward, we expect to see complaints linked to mis-sold PPI claims decrease further. As CMCs continue to be active in other areas, such as consumer credit, investments and mortgages, it’s important businesses and CMCs co-operate effectively, so consumers get fair outcomes as efficiently as possible.