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annual review 2015/2016

1 April 2015 to 31 March 2016

the types of problems we've seen

new cases by area of complaint

type of complaint 2016 2015 2014 2013 2012 2011
banking and credit 31% (106,327 cases) 24% (79,763 cases) 13% (65,077 cases) 15% (77,176 cases) 24% (64,234 cases) 31.5% (65,063 cases)
investments and pensions 4% (14,576 cases) 4% (14,723 cases) 3% (15,938 cases) 4% (19,834 cases) 6% (14,862 cases) 7.5% (15,483 cases)
insurance excluding PPI 9% (31,284 cases) 9% (30,080 cases) 6% (31,213 cases) 7% (33,172 cases) 10% (27,563 cases) 10% (20,978 cases)
payment protection insurance (PPI) 56% (188,712 cases) 63% (204,943 cases) 78% (399,939 cases) 74% (378,699 cases) 60% (157,716 cases) 51% (104,597 cases)
new cases in total 340,899 329,509 512,167 508,881 264,375 206,121

year ended 31 March

new cases by financial product

PPI 56
complaints about all other financial products 44

new cases involving financial products other than PPI

current accounts 37
consumer-credit products and services
(eg hire purchase, debt collecting and catalogue shopping)
mortgages 7.5
motor insurance 5.5
credit cards 5.5
unsecured loans 4
pensions 3
buildings insurance 3
savings accounts 2
term assurance 2
travel insurance 2
mortgage endowments 1
whole-of-life policies and savings endowments 1
contents insurance 1
other products 16

the issues the new cases involved

PPI: 56%

of which

  • complaints about sales and advice: 99%
  • other complaints: 1%

insurance (excluding PPI): 9%

of which

  • complaints about claims: 56%
  • complaints about sales and advice: 24%
  • complaints about administration: 20%

banking and credit: 31%

of which

  • complaints about administration: 23%
  • complaints about charges: 9%
  • complaints about sales and advice: 53%
  • complaints about transactions: 6%
  • other complaints: 9%

investments and pensions: 4%

of which

  • complaints about sales and advice: 59%
  • complaints about administration: 34%
  • other complaints: 7%

new cases by financial product

new cases by financial product year ended
31 March 2016
year ended
31 March 2015
annual change
PPI 188,712 204,943 down 8%
current accounts
including complaints about:
58,724 35,344 up 66%
- packaged accounts 44,244 21,348 up 107%
- direct debits and standing orders 510 541 down 6%
consumer credit products and services
including complaints about
13,382 9,572 up 40%
- payday loans 3,216 1,157 up 178%%
- hire purchase 3,072 1,784 up 72%
- point-of-sale loans 2,071 1,582 up 31%
- catalogue shopping 939 882 up 6%
- debt collecting 707 843 down 16%
- credit broking 563 1,213 down 54%
- hire, leasing and renting 508 333 up 53%
- debt adjusting 471 508 down 7%
- store cards 460 450 up 2%
- credit reference agencies 351 189 up 86%
- home credit 230 136 up 69%
- debt counselling 209 140 up 49%
mortgages 11,288 12,297 down 8%
motor insurance 8,585 7,361 up 17%
credit cards 8,200 8,482 down 3%
unsecured loans 6,156 6,255 down 2%
including complaints about
4,495 4,290 up 5%
- personal pension plans 1,985 1,618 up 23%
- small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs) 1,174 1,032 up 14%
- annuities 763 776 down 2%
- SERPS 218 436 down 50%
- income draw-down 160 180 down 11%
- free-standing additional voluntary contribution (FSAVC) schemes 146 142 up 3%
- pension mortgages 39 94 down 59%
other banking services
including complaints about:
4,334 3,754 up 15%
- money transfer 1,884 1,323 up 42%
- debit / cash cards 939 1,043 down 10%
- electronic payment 685 491 up 40%
- cheque clearing 501 563 down 11%
- foreign currency 90 74 up 22%
- safe custody 75 81 down 7%
buildings insurance 4,095 4,510 down 9%
investment-linked products
including complaints about:
3,182 3,128 up 2%
- investment ISAs 1,290 1,006 up 28%
- unit-linked bonds 543 560 down 3%
- guaranteed-income bonds 480 555 down 14%
- with-profits bonds 201 260 down 23%
- unit trusts 125 93 up 34%
- film partnerships 98 174 down 44%
- PEPs 76 63 up 21%
- structured products 25 37 down 32%
savings accounts 2,751 2,989 down 8%
term assurance 2,422 2,644 down 8%
travel insurance 2,267 2,318 down 2%
mortgage endowments 1,938 2,573 down 25%
whole-of-life policies and savings endowments 1,932 2,107 down 8%
home emergency cover 1,779 1,298 up 37%
contents insurance 1,389 1,436 down 3%
commercial vehicles and property 1,215 1,159 up 5%
portfolio management 1,193 1,236 down 3%
secured loans 1,130 1,070 up 6%
pet and livestock insurance 1,089 790 up 38%
income protection 999 1,156 down 14%
extended warranty insurance 934 777 up 20%
stockbroking 919 807 up 14%
including complaints about:
914 582 up 57%
- interest-rate hedging products 426 287 up 48%
- spread betting 209 98 up 113%
private medical insurance 873 786 up 11%
roadside assistance 803 733 up 10%
critical illness insurance 747 791 down 6%
legal expenses insurance 715 702 up 2%
personal accident insurance 709 422 up 68%
card protection insurance 666 1,401 down 52%
mobile phone insurance 589 536 up 10%
specialist insurance (including marine and event) 553 404 up 37%
building warranty 287 299 down 4%
business protection 267 253 up 6%
guaranteed asset protection (GAP insurance) 201 206 down 2%
caravan insurance 100 98 up 2%
products we haven't previously categorised
including complaints about:
365 - -
- instalment loans 211 - -
guarantor loans 61 - -
logbook loans 59 - -
total number of new cases 340,899 329,509 up 3%

complaints about insurance

type of complaint %
PPI 86
all other insurance-related complaints 14
type of complaint (excluding PPI) %
motor insurance 27.5
buildings insurance 13
term insurance 7.5
travel insurance 7
home-emergency cover 5.5
contents insurance 4.5
commercial vehicle and property insurance 4
pet insurance 3.5
income protection 3
extended warranty insurance 3
private medical insurance 3
roadside assistance 2.5
critical illness insurance 2.5
legal expenses insurance 2.5
personal accident insurance 2.5
card protection insurance 2
mobile phone insurance 2
guaranteed asset protection (GAP insurance) 0.5
other (including business protection, building warranty and caravan insurance) 4

In 2015/2016 we received 219,996 new complaints about insurance - including payment protection insurance (PPI). This was slightly lower than the previous year and represented 65% of new complaints we received as a whole.

Looking across insurance generally, the primary issue resulting in complaints to us remains the quality of communication between insurers and their customers. This applies whether a complaint is about how an insurer sold a policy, how they administered it, or how they dealt with a claim.

For example, some people who contacted us said they hadn’t ever been told about the policy term that the insurer was now using to turn down their claim. Generally, the root of the problem is communication at the time the policy was sold - in particular, how the policy terms and conditions were explained and understood.

In some areas of insurance, disputes over what is and isn’t covered can cause significant distress. For example, people claiming for medical treatment might delay surgery while they’re waiting for an outcome. From our experience, better communication - not only during the claims process, but when someone’s first choosing a policy - could prevent much of this disappointment and upset.

For their part, insurers continued to tell us that customers hadn’t disclosed or had “misrepresented” important information - in some cases, suggesting claims were fraudulent. However, we often found insurers hadn’t asked clear enough questions - so it wasn’t surprising their customers hadn’t given accurate answers. Where an intermediary was involved, we sometimes identified problems with how information had been passed to the insurer.

A large proportion of complaints about insurance involved claims that insurers had already accepted. Unfortunately, customer service issues - including poor communication - had made the settlement process unnecessarily stressful. Problems seemed particularly prone to arise when one or more third parties were involved - such as loss adjusters and contractors.

Some people we spoke to were confused about who they should be raising concerns with - and had already been passed from one party to another. Others were frustrated at ongoing delays, for which they couldn’t seem to get an explanation.

In many cases, these communication issues had caused avoidable upset at an already difficult time - for example, when people were dealing with the aftermath of flooding. In our conversations with insurers this year, we continued to encourage them to see beyond the “claims process” - and to instead focus on what their customer is actually going through.

Other complaints were escalated to us simply because people hadn’t understood the terminology their insurer had used. Once we’d put it in everyday terms, people often told us they “wished the insurer had just said that in the first place”. Many of these complaints could have easily been avoided if insurers hadn’t fallen back on jargon.

For example, we continued to hear from people who felt they’d been blamed for a car accident - after their insurer had recorded a “fault claim”. After we’d explained that this simply meant the insurer didn’t think they could defend the claim, people were generally content to let the issue drop.

case study

After some bad weather, Mr C’s garage roof collapsed - causing water to get in and damage his guitar collection. The insurer said they wouldn’t pay Mr C’s claim because his policy didn’t cover “escape of water”.

Mr C complained to the broker he’d used to buy and renew his policy - and later brought his complaint to us. When we listened to a recording of the renewal phone call, we heard the broker reassure Mr C that nothing had changed.

Mr C had been covered for water damage in the past and it was clearly important to him. We told the broker to arrange for the claim to be paid as if the right cover had been in place.

payment protection insurance (PPI)

year ended 31 March number of complaints
2016 188,712
2015 204,943
2014 399,939
2013 378,699
2012 157,716

By March 2016 we’d received over 1.5 million complaints about PPI - half of all the complaints we’ve ever received since we were set up in 2001.

As we explained in our plans for the year ahead - published in March 2016 - there’s uncertainty about how PPI will pan out. Overall, the number of PPI complaints we received in 2015/2016 continued to decline - although at a slower rate than people had generally expected. But looking ahead, a number of factors - including a proposed time limit for complaining about mis-sold PPI - could mean we see higher volumes once more, at least in the short term.

Draft proposals by the Financial Conduct Authority (FCA) on PPI complaints - on which consultation closed at the end of February 2016 - also included rules and guidance in light of the judgment by the Supreme Court in the case of Plevin v Paragon Personal Finance. In this case, the court decided that an undisclosed commission on a PPI policy could, in some circumstances, result in an unfair relationship under the Consumer Credit Act 1974.

Plevin - and the FCA’s response to it - was relevant to a significant number of PPI complaints we looked at during the year. Unfortunately, this resulted in delays for our customers - as uncertainties resulting from the ongoing regulatory and legal developments meant we were unable to progress cases as quickly as we’d hoped.

… during the year we were still able to resolve over 70,000 more PPI cases than we received

Disappointingly, in complaints that weren’t affected by Plevin, we still found that businesses were rejecting some complaints where it should have been clear we’d almost certainly agree that PPI had been mis-sold. Over the year, we’ve taken steps to address this with the businesses involved - ensuring they take notice of our long-standing approach to PPI.

However, during the year we were still able to resolve over 70,000 more PPI cases than we received, as we realised the benefits of our investment in recent years in our PPI case handling capacity.

This year we’ve continued to decide whether “alternative” PPI redress is fair for individual customers. But compared with last year, we’ve seen fewer new cases where businesses have offered this type of refund - based on someone being sold a different type of PPI policy to the one they were actually sold.

On the other hand, we’ve seen businesses increasingly refine the way they calculate compensation - particularly for credit card PPI. However, if someone’s had a PPI policy for many years, it may not be possible to get a full picture of what they paid. In these cases, we’ll recommend fair compensation based on the account history available.

Over three quarters of the complaints we’ve received about PPI have been referred to us on behalf of consumers by commercial claims management companies. The outcome of Carol Brady’s review of claims management regulation - as well as the Claims Management Regulator’s proposals for a cap on the fees charged by “no win, no fee” claims companies - should affect the number and type of complaints that claims managers refer to us in the future.

During the year we continued to have frank conversations about the quality of information claims managers were giving us about PPI complaints. Just as in other areas of complaints, we told claims managers that they needed to be far more specific - with us and with businesses - about their clients’ individual circumstances when they were sold PPI.

motor insurance

year ended 31 March number of complaints
2016 8,585
2015 7,361
2014 7,190
2013 7,785
2012 7,264

We heard from a number of people this year whose motor insurance had been cancelled. In some cases, this had happened without their knowledge - and they’d only found out after being pulled over for driving without insurance.

Driving without insurance is illegal - and insurers know how serious the consequences of cancelling a policy can be. Some complaints had arisen following unsuccessful auto-renewals and other administrative errors. But if an insurer is intending to cancel a policy, an open conversation with their customer - well before the cancellation date - is likely to help prevent unexpected upset later on.

People also complained to us about the repairs their insurer had arranged after car accidents. Some told us the damage hadn’t been adequately repaired - or that further damage had been caused by the repairs.

We carefully check records relating to the repairs to clear up what - if anything - has gone wrong. In some cases, we found the insurer in question didn’t have a quality-checking system in place.

travel insurance

year ended 31 March number of complaints
2016 2,267
2015 2,318
2014 2,271
2013 2,742
2012 2,431

We continued to hear from people who’d fallen ill or been injured while on holiday - and were unhappy with their travel insurer’s response. In general, this was because the insurer was refusing to pay for their medical treatment - or had taken too long to guarantee the payment.

Some people who contacted us had been admitted to a private hospital - whereas their insurance only covered treatment in a public hospital. If we find that an insurer explained this - and their customer still went ahead - we generally say it’s fair for the insurer to pay the amount the treatment would have cost in a public hospital.

… we continued to hear from people who’d fallen ill or been injured while on holiday

We’ve also seen a number of problems with annual travel policies - particularly those that come with a packaged bank account. These problems often came about because someone’s health had changed during the year - and when they came to make a claim, they found they weren’t covered.

In these cases some people were confused as to who they should contact about the problem - their bank or their travel insurer. There’s more about the complaints we’ve seen about packaged bank accounts later in this section. The position can be complicated - because a problem with a claim might indicate the policy wasn’t right for someone in the first place.

In some cases, we found the insurer hadn’t clearly told a customer that they needed to report any changes to their circumstances. We usually told these insurers to pay the claim in question.

buildings and contents insurance

year ended 31 March building insurance
2016 4,095
2015 4,510
2014 4,095
2013 4,611
2012 4,556
year ended 31 March contents insurance
2016 1,389
2015 1,436
2014 1,771
2013 2,027
2012 2,089

We generally get relatively few complaints relating to major episodes of bad weather - but like most years, we saw a rise in complaints directly after the colder, wetter winter months. Among these complaints, a number related to the serious flooding experienced by parts of the UK in the winter of 2015/2016.

Typically, people were upset that their claim hadn’t yet been dealt with, were concerned about significant delays in the process, or were unhappy with the quality of repairs.

… FCA has recently consulted on ways that annual price changes can be made clearer

But we recognise that when insurers are considering a claim, it can be difficult to establish the full picture of what happened - especially if they’re real.

We’ve also continued to receive complaints from people who are unhappy with the way in which their home insurance premiums have risen year-on-year. It’s not our role to set the price of insurance - but we can check that insurers have applied their pricing policies fairly to individual customers. The FCA has recently consulted on ways that annual price changes can be made clearer.

health and medical insurance

year ended 31 March number of complaints
2016 2,329
2015 2,733
2104 3,333
2013 3,800
2012 2,295

This year we continued to hear from people who had a medical problem that they thought they were insured for - who were surprised and upset to hear their claim had been rejected.

With income protection complaints in particular, we often found that the insurer hadn’t made clear exactly what they covered. As a result, some people had ended up with duplicated cover - or policies that didn’t suit their particular circumstances.

Some people who’d had a private medical claim turned down said they hadn’t been told their cover had changed. In some cases, we found insurers hadn’t done enough to notify customers about important changes when their policy was renewed.

banking and credit

type of complaint %
packaged bank accounts 41
current accounts 13
consumer credit products and services (eg point-of-sale loans, hire purchase and catalogue shopping) 13
mortgages 11
credit cards 8
unsecured loans 6
savings accounts 3
secured loans 1
other banking services 4

Each year we see a wide range of problems involving banking and credit. Across these diverse products and services, we've identified a number of common underlying issues that often result in complaints being referred to us.

addressing financial difficulties

A significant proportion of the complaints we received this year about banking and credit involved people experiencing financial difficulties.

In our experience of resolving these complaints, we’ve found that people are often embarrassed that they’re struggling with their financial commitments - or worried about the consequences of admitting it. Unfortunately, this means some people who contact us have put off asking for help - and in the meantime, their difficulties have continued to escalate.

As in previous years, we heard from people stuck in a spiral of debt, interest and charges - which had left them unable to pay essential bills. Some were so far into mortgage arrears that they were facing repossession. While we can look into complaints about mortgage companies, repossessions usually happen after a court order, which we can’t overturn.

It was clear that many of these situations would have been less distressing - or avoided altogether - if financial businesses and their customers had had open, honest conversations at a far earlier stage.

When someone tells a business they’re struggling, the business has an obligation to respond constructively. This can mean a variety of things - from agreeing repayment holidays or lower repayments, to signposting people to free help with managing debt. And over the year we saw many examples of businesses finding fair, practical ways forward for customers who needed support.

Disappointingly however, we had to remind some businesses of their obligations in this area. We also found that some businesses had focused narrowly on one debt - rather than taking into account their customers’ circumstances as a whole.

Some people who contacted us simply hadn’t told the business that they were having trouble. And we sometimes decided there was no way the business could have known. But in a number of complaints, we were able to identify clear signs that there was a problem - and steps that the business could have taken to stop things getting worse.

For some people who contacted us this year, what started out as a small financial setback had escalated into significant debts across various lenders and accounts. A number of these people had turned to paid-for debt management services - but told us that, once the debt manager’s charges had been applied, their debts didn’t actually seem to be falling. As well as looking into someone’s complaint about their debt management, we can signpost them to sources of free support.

After rising by half in the previous year, the number of complaints we received about payday loans more than doubled in 2015/2016. This could reflect the high level of publicity there’s been around payday loans this year, following FCA action in response to unfair practices by certain payday lenders. We also heard from people who said they couldn’t afford to repay their loan - and that they shouldn’t have been given it in the first place.

case study

After Mr W had to take a pay cut, he took out a £200 payday loan. When he realised he would miss his deadline to repay the loan, he emailed the lender to say he was struggling.

The lender didn’t reply. Instead, they used a continuous payment authority to try to take the money directly - leading to further charges being added to Mr W’s loan.

After several more emails over the next couple of weeks, the lender eventually responded - saying they’d only accept the full amount, including interest and charges.

In our view, Mr W had been open and honest about his difficulties - and had been proactive in trying to repay what he owed. But the lender hadn’t responded constructively - and initially hadn’t responded at all.

We told the lender to refund the interest and fees they’d applied since Mr W first contacted them - as well as any bank charges he’d incurred. We also told them to pay £100 for the stress they’d caused Mr W - and to work with him to reach an affordable repayment plan.

responding to scams

Each year we hear from people who’ve been the victims of scams. And as businesses adapt and develop the services they offer - and people do their banking in different ways - the scams we hear about continue to change and evolve.

Like last year, we continued to see complaints this year involving people who’d been tricked into thinking they were talking to their bank or the police on the phone. Believing the caller was protecting them from fraud, people gave out their bank details - typically being told their money will be transferred to a safe account.

While the number of complaints we see involving scams is relatively small, their impact on individual people can be significant. Some people who contacted us had lost their life savings - and were understandably extremely distressed.

We sometimes found people had been through their own bank’s genuine security procedures in order to transfer the money. In giving their security passwords and codes, they’d given their bank their permission to make the transactions in question. This often meant that the bank wasn’t obliged to cover the lost money.

In some cases, however, we decided that the bank in question could have done more to prevent the scam - or could have responded better once they were aware of what had happened. In our conversations with banks over the year, we continued to remind them to be sensitive to what their customers are going through - regardless of who’s technically responsible for the money being lost.

In summer 2015, we shared our insight into the complaints we were receiving about fraud - in particular telephone fraud. In light of what we were seeing going wrong, we encouraged businesses to warn their customers about the risk of scams - and suggested ways that people can help to protect themselves.

case study

After she’d transferred money to scammers, Mrs O complained to us that her bank should have stopped the fraud. Following our involvement, the bank told us her experience had prompted them to warn all their customers about this kind of fraud - with the aim of making it less likely that other people would fall victim to it.

responding to vulnerability

Over the year, we heard from a large number of people who were clearly in a vulnerable position having problems with banking and credit.

As we explained in ombudsman news in August 2015, vulnerability doesn’t simply involve long-term problems like poor health. It can also be shorter-term - arising from significant events such as divorce, bereavement or sudden illness.

Vulnerability may cause - or coincide with - financial problems. And a financial business’s response can be a key factor in stopping things getting worse. Unfortunately, we found some businesses hadn’t responded appropriately to customers’ vulnerability - or hadn’t identified the vulnerability at all.

In some cases, we decided that a business had put a vulnerable customer in a more vulnerable position - or had even made them vulnerable in the first place. In these circumstances, we’re likely to tell a business to pay compensation for the upset their actions (or inaction) have caused.

"… many people felt that the short-term loans they had been offered were unaffordable"

case study

When Mr G, aged 16, applied for a new bank account, his application was refused. The new bank said his previous bank had recorded a fraud marker against his name - because they believed he’d “knowingly and actively” taken part in a scam.

Mr G’s father complained to his previous bank. He explained that Mr G’s previous account had been used for fraud - after Mr G, who was being bullied, had been forced to hand over his card and PIN. But the bank wouldn’t remove the fraud marker.

Mr G’s father contacted us. He provided a letter from his son’s head teacher, confirming the bullying and subsequent fraud. We also saw related police reports, which confirmed there was no suggestion that Mr G had “knowingly and actively” taken part in the fraud.

From what we’d seen, it was clear the bank hadn’t done enough to investigate Mr G’s situation. We told them to remove the fraud marker and to pay £150 for the upset they’d caused.

complaints about current accounts

year ended 31 March number of complaints
2016 58,724
2015 35,344
2014 19,878
2013 19,560
2012 14,595

As we explained earlier in this section, we heard from a number of people this year who’d given fraudsters their debit card or current account details.

By the time a complaint is escalated to us, there’s often very little that can be done to recover people’s money. We found that some businesses had done all they could to protect their customer’s money - and to try to get it back once they knew about the scam. Banks who hadn’t responded appropriately - causing their customer to lose more money - often agreed to refund money following our involvement.

Since the launch of the current account switch service in 2013, we’ve continued to hear from some people who feel things haven’t gone smoothly. Many of these complaints involve payments being misdirected. Where something’s gone wrong with an account switch, we’ll check the bank has made sure their customer isn’t out of pocket.

Over the year, there’s been some media coverage of unexpected current account closures. We heard from a number of people who complained that their account had been closed - often without any explanation, and sometimes without any notice.

In these cases, we’ll make sure that the bank fairly applied the account’s terms and conditions. We’ll also check that they gave sufficient notice of what they were doing - so their customer had time to make other arrangements.

It’s ultimately a bank’s choice who to have as a customer - and it’s unlikely that our involvement will result in an account being reopened. But if we find the bank hasn’t acted reasonably, we’ll consider whether they should compensate their customer for any inconvenience or other upset they’ve caused.

complaints about packaged bank accounts

year ended 31 March number of complaints
2016 44,244
2015 21,348
2014 5,713
2013 1,546
2012 34

A significant proportion of the complaints people referred to us about current accounts involved packaged services.

In most cases, we decided that, overall, the package of extras that came with someone’s account had been useful to them - or had saved them money. This was often the case even if they couldn’t use all the extras.

case study

Mrs D complained that she hadn’t agreed to have a packaged bank account.

We found that - around the time she’d switched to the packaged bank account - Mrs D had asked the bank for a loan to pay for her daughter’s wedding. By opening a packaged bank account, she’d got a lower interest rate on the loan. She’d also told the bank she was interested in the travel insurance that came with the account.

We decided it was likely that Mrs D had agreed to have the account - and we explained that it had saved her money.

However, we decided that some customers had been sold accounts that they didn’t want or need. Some people couldn’t have used any of the account’s extras - or couldn’t use the extras they’d specifically opened it for. In a few cases, people who hadn’t had a UK bank account before weren’t told that free account options were available.

This year we’ve continued to push back where claims managers - who refer the majority of the complaints we receive about these accounts - refer clients to us who clearly haven’t lost out. At the same time, we’ve helped businesses who sold (and sell) packaged bank accounts to understand and apply our approach to complaints.

We’re encouraged to see signs that both sides have found these conversations useful. Banks are following our approach more consistently. And claims managers have been more selective in the complaints they refer to us - recognising where a bank has already given a fair answer.

complaints about savings accounts

year ended 31 March number of complaints
2016 2,751
2015 2,989
2014 3,611
2013 4,967
2012 4,286

Interest rates on savings accounts have remained at record lows this year, reflecting the continuingly low Bank of England base rate. And we continued to hear from people unhappy with the returns on their savings - after initially receiving a higher promotional rate.

In some cases, people told us that they hadn’t been notified of the change in interest rate. We also heard from people who told us they hadn’t actually received the advertised rate.

It isn’t our role to set interest rates. But we’ll check that the business in question explained the interest rate that would apply - including any changes - in a clear and appropriate way. In December 2015, the FCA announced new measures aimed at improving information about savings interest rates - which will apply from December 2016.

complaints about other banking services

year ended 31 March number of complaints
2016 4,334
2015 3,754
2014 3,517
2013 3,838
2012 2,955

In some scams, people are tricked into using payment services such as money transfers and BACS. A number of people complained to us this year about the bank that received the money they’d unwittingly transferred to fraudsters.

Most people who contact us are customers of the businesses they’re having problems with. So it’s encouraging that people are also aware that, in certain circumstances, they can turn to a business they don’t have a direct relationship with for help.

However, we often have to explain exactly how we can help. For example, people may be upset that the bank in question allowed the scammer to open a bank account. But it’s not our role to tell businesses who they should and shouldn’t have as customers. Instead, we’ll look into how the receiving bank responded once they knew about the scam.

We’ve also continued to receive complaints about safe custody services. Typically, people have left a box of valuables in their bank’s care - and complain either that their bank can’t find the box or that something’s been taken from it.

Unfortunately, there’s often very little evidence about what’s happened - because neither the bank nor their customer have evidence of what was in the box. Disappointingly, in a number of cases we found banks hadn’t looked thoroughly enough for a customer’s possessions before saying they were lost.

While online banking has been linked to a fall in the use of cheques, this more traditional means of payment can increasingly be carried out using mobile technology. Cheques remain a small but consistent feature of the banking complaints we see - from stolen cheques to delays in clearing.

On the other hand, we’ve seen very few complaints about newer banking services such as contactless card and mobile payments. The limits for these types of payments are relatively low. It may be that businesses are refunding small disputed transactions very quickly - or that people are willing to let small amounts of money go.

complaints about mortgages

complaints about mortgages number of complaints
2016 11,288
2015 12,297
2014 12,606
2013 11,920
2012 9,537

Two years after new rules on mortgage lending came into force, we’re still receiving complaints about how they’ve been applied by some mortgage lenders. In particular - as we highlighted in ombudsman news in July 2015 - some people are telling us they’ve been discriminated against because of their age.

It isn’t illegal - or necessarily unfair - for a mortgage company to take a customer’s age into account when deciding whether to lend to them. However, we’ve had to continue to remind lenders that rigidly applying rules - without considering each customer’s individual circumstances - won’t always lead to a fair answer.

In some cases, we found that the underlying problem wasn’t the lender’s decision, but their communication. This was reflected in an increase in complaints about mortgage porting. In investigating these cases, it often became clear that the lender hadn’t explained how porting worked - in particular, that only the mortgage product, and not the whole mortgage, would be ported.

We continued to hear from people with interest-only mortgages who were worried that they wouldn’t be able to repay the capital at the end of their mortgage term. Encouragingly, we’ve seen signs that homeowners are talking to their mortgage companies at an earlier stage if they fall into financial difficulty.

However, given the consequences of serious mortgage arrears, it’s perhaps not surprising that some people attempt to avoid their mortgage debt altogether. This year we’ve seen a small number of complaints from people who say that a “legal loophole” - which they’ve usually read about online - means their mortgage isn’t valid.

It’s the role of the courts - not the ombudsman - to make a call about whether a mortgage is legally valid. But we can look into how the mortgage company has responded to their customer’s financial difficulties.

complaints about consumer credit and credit cards

consumer credit number of complaints
2016 13,382
2015 9,572
2014 7,630
2013 8,470
2012 7,416
credit cards number of complaints
2016 8,200
2015 8,482
2014 10,472
2013 19,634
2012 19,183

Items like solar panels, cars and timeshares aren’t something people would automatically associate with the ombudsman. But people continued to contact us this year about a range of goods and services they’d bought on finance.

During the year we added more information to our website to explain how we can help with these types of problems - and how people can prevent and resolve these issues themselves. And we added more information around payday lending, following a 178% rise in complaints about payday loans.

We also heard from people who said they were being chased for debts that weren’t theirs. It’s clearly unfair and upsetting to be contacted repeatedly - but wrongly - about something so serious as debt. So we ask lenders for strong evidence that they’re seeking repayment from the right person.

As we explained earlier in this section, we received a number of complaints about debt management services this year. Disappointingly, we saw an increase in cases where the debt manager wasn’t responsive to their customer or to us - or had gone into liquidation.

Sometimes, where a debt manager has gone bust, it’s clear that there’s no realistic prospect of customers receiving any compensation. In these circumstances, we’ll explain the position to any customers who contact us - and direct them to organisations who can offer free support with debt.

In June 2015, the FCA published a review of debt management services - including their findings that some debt managers hadn’t treated vulnerable customers fairly. We shared our insight in this area in ombudsman news in March 2016.

case study

Mr R paid on his credit card for a tailor-made suit - but when the suit arrived, it didn’t fit properly. After the tailor didn’t turn up to an appointment to alter the suit, Mr R complained to his credit card provider. But they said there was no evidence the suit didn’t fit when it was delivered.

Mr R sent us photos of himself wearing the suit, which clearly showed the sleeves were too long and the trouser legs too short. We could see he’d got in touch with the tailor as soon as he’d realised there was a problem - and had given the tailor a chance to put things right.

Given that Mr R paid for a tailored suit - and the suit clearly didn’t fit - he hadn’t received what he’d paid for. So we told the credit card provider to refund the cost of the suit.

We continued to receive complaints involving credit cards this year - and in particular, claims made under section 75 of the Consumer Credit Act 1974. This part of the law says that in some cases, where there's a problem with the goods or services someone's bought, they can ask their credit card provider to put things right.

Disappointingly, in a significant number of cases we had to clarify these legal responsibilities to credit card providers.

complaints about unsecured loans

year ended 31 March number of complaints
2016 6,156
2015 6,255
2014 6,310
2013 7,809
2012 6,262

We continued to hear from people - including those running small businesses - who were struggling with loan repayments. In some cases, we found that lenders could have offered their customers greater support at an earlier stage.

Some people complained to us that lenders wouldn’t lend to them - generally because the lender felt the loan would be unaffordable. It’s not the ombudsman’s role to tell lenders who to lend to. But it’s likely that some of these complaints could have been prevented if lenders had clearly explained the reasons behind their decisions.

We also heard from a number of people who’d given a personal guarantee on a loan for someone else. In many cases, we found the lender hadn’t made sure the guarantor knew what they were agreeing to - in particular, that they’d be completely responsible for the repayments if the borrower didn’t pay.

the types of problems we've seen: investments and pensions

We received 14,576 complaints about investments and pensions over the year. This represented 4% of the total number of new complaints we received across the ombudsman - the same proportion as last year.

This table shows the different types of investment and pension-related products that were involved in those complaints.

type of complaint %
personal pension plans 14
mortgage endowments 13.5
whole-of-life policies and savings endowments 13.5
investment ISAs 9
portfolio management 8
small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs) 8
stockbroking 6
annuities 5
unit-linked bonds 4
guaranteed-income bonds 3.5
derivatives (including interest-rate hedging products and spread betting) 3.5
"with-profits" bonds 1
other (including unit trusts, "structured" investments and income drawdown) 10

Each year we deal with a wide range of complaints about investments and pensions. Among all the problems we’ve helped with, we’ve continued to see a number of common underlying issues.

communication and expectations

As in previous years, the majority of complaints we received about investments and pensions centred on the conversations that happened when they were sold. Problems may only come to light - and be escalated to us - years later, when arrangements don’t work out as planned.

For example, we continued to hear from people who were disappointed with how their investments had performed - and felt the risks to their money hadn’t been properly explained in the first place. In some cases, we decided the business hadn’t made the risks clear - or hadn’t managed people’s expectations well. In others, we found people hadn’t read important information - or simply had unrealistic expectations.

Communication was also at the root of most complaints we received about certain whole-of-life products. These products are regularly reviewed - after which the premium or level of cover may go up or down. We continued to hear from people who said they weren’t warned upfront that these sorts of changes could happen.

We also heard from people who’d invested in structured investments, guaranteed funds and structured deposits. These products can be complex. And in many cases, we found people were confused about how they worked - and what that meant for the returns they might get.

the suitability of advice

Another large proportion of complaints about investments and pensions stemmed from the appropriateness of the advice people had been given. We continued to hear from people who had little or no experience of the types of complex investments they’d made.

In many cases, businesses were able to show us they’d carefully weighed up their customer’s individual circumstances. But in others, we found that businesses hadn’t fully explored all the options - or had given inappropriate advice. And we decided that a number of people had been sold products that were totally unsuitable for their needs, experience and attitude to risk.

For example, we continued to see a steady number of complaints about unregulated collective investment schemes (UCIS). As we explained in ombudsman news in June 2015, at times of low returns on conventional savings, the high returns promised by exotic markets - ranging from wine to renewable energy - may sound particularly appealing. The FCA has now tightly restricted the sale of UCIS. But we still hear from people who, having invested in the past, have now lost significant amounts of money.

case study

After Mr J died, Mrs J complained that, because of his high blood pressure, he should have been offered an enhanced annuity. But the pension provider said they hadn’t given Mr J any advice about what annuity to buy.

We asked for the letters the pension provider had sent to Mr J as he approached retirement. We could see that they’d told him that he could buy an annuity from another provider. They’d said that it was “highly likely” he could get a higher level of income if he did. The pension provider told us that they hadn’t offered enhanced annuities at the time.

We explained to Mrs J that, in our view, the pension provider had given Mr J enough clear information about his options.

case study

After being told his investments had lost money, Mr M complained that 80% of his funds had been invested in unregulated collective investment schemes (UCIS) exposed to overseas property.

Mr M had received advice before the selling of UCIS to retail investors was further restricted. His financial adviser had recorded his attitude to risk as “cautious”. And he’d told the adviser that he wanted to eventually give his money to his grandchildren.

In light of this, we decided that the investments into the UCIS were unsuitable for Mr M’s investment portfolio. We told the adviser to put Mr M in the position he’d be in if he’d received appropriate advice.

case study

After finding out that their investments had dropped in value, Mr and Mrs F complained that some of their money had been invested in a UCIS.

Mr and Mrs F’s adviser had recorded their objective as “capital growth” and their attitude to risk as “medium”. But the adviser couldn’t explain how he’d decided that a high-risk investment like UCIS was suitable - or show that he’d highlighted the risks to Mr and Mrs F.

We decided that the advice wasn’t suitable and told the adviser to put the couple in the position they’d be in if they’d taken out a less risky investment.

administration and delays

While the products involved may be complex, around a third of investment and pension related complaints we received this year arose from basic administration problems and delays.

Once again, we found that many problems could have been put right far sooner - and without our involvement. Unsurprisingly, many people were both worried and frustrated that large amounts of money - in some cases, their future financial security - could be put at risk by such seemingly simple mistakes.

For example, around half of all the complaints we received about pensions were about delays and administration issues. This included the small number of complaints we received from people trying to access their pensions - following the introduction of pension freedoms in April 2015.

Across the area of investments, we heard from people who’d lost out because of basic errors in calculating interest and returns. This included - as in previous years - people who’d missed the chance to invest their yearly stocks and shares ISA allowance as a result of delays in transferring funds.

complaints about mortgage endowments

year ended 31 March number of complaints
2016 1,938
2015 2,573
2014 3,573
2013 4,657
2012 3,267

After falling sharply last year, the number of complaints we received about mortgage endowments dropped again this year. But they remain the second most complained-about investment product - despite now making up only 2% of our caseload, compared with 63% at their peak ten years ago.

Because of time limits that apply to bringing a complaint about a mortgage endowment, it’s now too late for many people to complain about their policy. If someone wasn’t told about the time limits - or if there were exceptional circumstances meaning they couldn’t complain in time - we might be able to look into their concerns.

complaints about whole-of-life insurance

After falling for the previous two years, the number of complaints about whole-of-life policies fell again this year. Most complaints came from people unhappy that their premiums had increased or their cover had changed - following a review of the policy by the provider.

We’ve also continued our work with claims managers to prevent them unnecessarily escalating these kinds of complaints to businesses and to us. This builds on our work in previous years to push back where claims managers refer complaints we clearly can’t look into - and those where there’s no evidence that the business acted unfairly.

As a result of our frank conversations about our stance, over the year we’ve noticed a significant improvement in the quality of the complaints being referred to us by claims managers.

complaints about pensions

year ended 31 March number of complaints
2016 4,495
2015 4,290
2014 4,361
2013 4,401
2012 3,454

We received around 5% more complaints about pensions this year - covering a range of different pension products. As in previous years, around half of these were about problems with administration and delays. And around half came down to the suitability of the advice people received when making pension arrangements.

We continue to see complaints involving significantly more than £150,000 - the maximum amount we can direct a business to pay a customer - although we can recommend a business pay more.

After increasing by a third last year, the number of complaints we received about annuities steadied this year. Annuities - a retirement income people buy with their pension pot - continued to receive a large amount of publicity during the year. This follows changes that were introduced in April 2015 which mean people have more freedom in the way they access their pensions.

We heard from a number of people who’d said they’d had problems trying to take their pension as a lump sum. Many complaints centred on delays in accessing their money. Some people were unhappy about the fees they were being charged to end their existing pension arrangements early.

Others were concerned about the need to seek financial advice - and the accessibility of that advice - where this was a requirement of taking their pensions under the new freedoms.

Last year we explained that we’d seen a significant rise in the number of complaints from people who’d taken out self-invested personal pension plans (SIPPs). Three quarters of these complaints were about advice to invest in UCIS.

We also received more enquiries about so-called “pension unlocking” or “liberation” schemes this year. Typically, people had received a call or text from a company about a “legal loophole” - which, on the face of it, offered them the chance to access their retirement pot early. But these companies often hadn’t given the full picture - particularly around the tax implications.

Some people who contacted us had lost everything in their pension after signing up to “liberate” or “unlock” it. From experience, we know that the sooner people report what’s happened, the better the chances of recovering the money. People who’ve had a bad experience with schemes such as these can contact the national fraud reporting centre, Action Fraud.

Many of the companies involved in these schemes aren’t actually regulated or covered by us. But if someone’s unhappy with the response of their pension provider, we can look into whether the provider took adequate steps to protect their customer’s money - and how quickly they acted once they knew there was a problem. 

complaints about other investment-linked products

year ended 31 March number of complaints
2016 3,182
2015 3,128
2014 3,104
2013 4,697
2012 3,308

Complaints about investment-linked products remained broadly stable - despite the market during the year.

We continue to hear from people who’ve lost money they invested in UCIS. We also continue to receive complaints about more traditional investments. For example, people with stocks-and-shares ISAs contacted us after losing out on the chance to invest - generally as a result of delays in transferring funds.

Like last year, we heard from people with structured investments, guaranteed funds and structured deposits. Many were unhappy to see a low return on their investment after a number of years - and complained that, when they were sold the investment, they were told they would get a higher return.

In the area of investments, we see a relatively high number of complaints about businesses that have failed - either before or after someone has contacted us. In these cases, we’re often able to refer people to the Financial Services Compensation Scheme (FSCS).

complaints about stockbroking and portfolio management

year ended 31 March number of complaints
2016 2,112
2015 2,043
2014 2,079
2013 2,428
2012 1,842

We received a steady number of complaints about stockbroking and portfolio management this year. Yet again, a significant number of these came down to delays and basic errors in administration and calculations.

Compared with last year, we heard from fewer people who were unhappy with advice they’d received to invest for tax reasons - generally in more exotic schemes such as film partnerships and carbon trading. HM Revenue and Customs has recently put further restrictions on such schemes.