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annual review 2015/2016

1 April 2015 to 31 March 2016

who the complaints were about

In total, we cover over 50,000 financial businesses - made up of those who are regulated by the Financial Conduct Authority (FCA), as well as a number who’ve signed up voluntarily so their customers can use the ombudsman.

These businesses range considerably in size - from sole traders to multinational financial services providers. As in previous years, in 2015/2016 the volume of complaints we received about different businesses broadly reflected the size of those businesses.

Of the total number of businesses we cover, fewer than one in ten had complaints referred to us this year. More than half of these complaints involved just four of the UK’s largest banking groups.

  • 4 banking groups accounted for 56% of new complaints referred to us this year.
  • the next 41% of complaints related to another 358 businesses.
  • the remaining 3% of complaints were about 4,076 businesses, each with fewer than 25 complaints.

Since April 2013 we’ve charged an individual case fee only for the 26th and each subsequent complaint we receive about a business each year. As in previous years, this meant that more than nine in ten of businesses whose customers complained to us in 2015/2016 didn’t pay any case fees at all.

how the complaints were spread across the businesses we cover

  • 2,299 businesses each had 1 complaint referred to the ombudsman service during the year
  • 608 businesses each had 2 complaints referred to us
  • 290 businesses each had 3 complaints referred to us
  • 610 businesses each had between 4 and 10 complaints referred to us
  • 223 businesses each had between 11 and 20 complaints referred to us
  • 192 businesses each had between 21 and 50 complaints referred to us
  • 94 businesses each had between 51 and 100 complaints referred to us
  • 91 businesses each had between 101 and 250 complaints referred to us
  • 38 businesses each had between 251 and 500 complaints referred to us
  • 49 businesses each had more than 500 complaints referred to us during the year

complaints data about named businesses

As we explain in the section our insight and outreach, every six months we publish tables of data on our website about the complaints we’ve been dealing with and the businesses involved.

For businesses that have had 30 or more new cases and 30 or more resolved cases over the previous six months, we show both the number of new complaints and the proportion of complaints we upheld.

From January 2016, we’ve also shared the numbers of complaints we’ve settled at an early stage. Under new rules that have applied since July 2015, we’ve been able to get involved in a complaint before the business has investigated - if both the business and their customer agree.

businesses we received complaints about - by sector

banks 72
general insurers 10
building societies 3.5
insurance intermediaries 3.5
consumer credit businesses 3
life insurance and investment product providers 3
mortgage intermediaries 2
independent financial advisers (IFAs) 1
other (including fund managers and stockbrokers) 2

Although we’re starting to see declining numbers of complaints about payment protection insurance (PPI), volumes have remained higher than we had planned for following consultation with our stakeholders. So the proportion of complaints involving banks - who sold the policies involved in the majority of PPI complaints - also remains high.

the types of problems we’ve seen - by sector

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

complaints about PPI %
banks 83
general insurers 8
insurance intermediaries 3
building societies 4
other 2
complaints about insurance (excluding PPI) %
general insurers 61
insurance intermediaries 16
banks 9
life insurance and investment product providers 6
other 8
complaints about banking and credit %
banks 80.5
consumer credit businesses 10.5
mortgage intermediaries 5
building societies 2
other 2
complaints about mortgages %
banks 60
mortgage intermediaries 20
building societies 11
IFAs 2
other ( including non-bank mortgage providers) 7
complaints about investment products %
life insurance and investment product providers 36
banks 32
IFAs 10
stock brokers and fund managers 7
building societies 3
other - including brokers, general insurance providers, friendly societies and consumer credit businesses 12
complaints about pensions %
life insurance and investment product providers 55
IFAs 17
banks 6
other - including stockbrokers, consumer credit businesses and friendly societies 22
complaints about advice and sales %
banks 81
general insurance and/or mortgage brokers 6
general insurance providers 5
building societies 3
life insurance and investment product providers 2
other (including IFAs) 3
complaints about claims %
general insurance providers 76
life insurance and investment product providers 6
banks 6
general insurance and/or mortgage brokers 5.5
other 6.5
complaints about administrations %
banks 52
general insurance and/or mortgage brokers 10
consumer credit businesses 9
life insurance and investment product providers 8.5
general insurance providers 8
building societies 4.5
other 8
complaints about charges %
banks 75
general insurance and/or mortgage brokers 10
consumer credit businesses 7
building societies 5
other 3

the outcomes of complaints

On average, during 2015/2016 we upheld 51% of complaints in consumers’ favour. There’s more information about how we settled complaints this year in the section investigation.

As the chart shows, the outcome of complaints continues to vary between different financial sectors and between the types of financial products involved.

% of complaints we upheld - by financial sector

banks 56
PPI 72
mortgages 37
investments 31
insurance (excluding PPI) 28
pensions 27
banking and credit 22
intermediaries selling PPI 56
consumer credit businesses 49
PPI 53
banking and credit 48
mortgages 41
intermediaries selling banking and/or mortgage products 44
banking and credit 49
mortgages 41
independent financial advisers (IFAs) 40
pensions 51
investments 43
banking and credit 26
intermediaries selling general insurance 35
general insurers 33
insurance (excluding PPI) 36
PPI 27
life insurance and investment product providers 28
building societies 16
investments 38
mortgages 29
banking and credit 28
insurance (excluding PPI) 15
PPI 11

listening to businesses

  % who agreed % who expressed no view % who disagreed
you gave me clear and honest answers and let me know where I stood 80 16 4
you got to grips with things and used common sense 72 16 12
you listened to me and cared about what I had to say 70 19 11

As in previous years, we’ve found that complaints handlers at financial businesses are generally more positive about the ombudsman than their managers are. This probably reflects the closer working relationships we tend to have with people who deal directly with complaints - and who talk to us every day to sort out their customers’ problems.

how managers at financial businesses rated our service

  % who agreed % who expressed no view % who disagreed
the financial services industry can have confidence in the ombudsman service 57 20 23
our service is good value for businesses who pay the levy/case fees that fund us 53 27 20
our decisions on cases are fair and unbiased 49 25 26
our decisions are consistent 50 22 28
we provide a good dispute resolution service for businesses 65 17 18

It’s important that the businesses who fund us have confidence in us - including the way we run our service. So it’s encouraging that, once again, a majority of managers at financial businesses - who include heads of compliance, customer service managers, legal advisers and company secretaries - agree that we provide good value for money.

our budget and funding

We’re funded through a combination of annual levies on the financial businesses we cover and fees for the individual complaints referred to us each year. We review our funding arrangements at the beginning of each year - based on the types of problems we and our stakeholders expect to see in the year ahead.

Following public consultation in early 2015, the board of the FCA and our own board approved a budget for our service that assumed income of £223.9 million and expenditure of £270.3 million - with a forecast unit cost of £678. Our unit cost is calculated by dividing our total costs (before financing charges and any bad debt charge) by the number of cases we’ve resolved during the year.

In 2015/2016 the overall fees charged to the financial services sector for our service were forecast to be 11% lower than the previous year. We again froze the levy paid by financial businesses. And we maintained our group-account arrangement for the eight largest financial groups - so that, in line with our plans, two thirds of our workload was paid for in a fair, stable way by the businesses whose customers use us the most.

This year we kept the individual case fee at £550 for the 26th and each subsequent complaint - the third year it’s been at this level. This arrangement recognises that customers of small businesses contact us only rarely. It meant that, even among businesses whose customers did complain to us this year, nine in ten paid no case fees at all.

2011 2012 2013 2014 2015 2016
£639 £484 £720 £430 £536 £586

year ended 31 March

Our actual unit cost was £586 - lower than we forecast, reflecting the fact that we resolved higher volumes of complaints than expected about PPI and packaged bank accounts.

summary of our income and expenditure

  actual budget actual
  year ended 31 March 2015 year ended 31 March 2016 year ended 31 March 2016
income £ million £ million £ million
case fees 61.3 51.0 57.5
supplementary case fees 0.0 0.0 0.0
group fees 163.9 146.6 157.7
compulsory jurisdiction levy 23.5 23.3 24.2
consumer credit jurisdiction and voluntary jurisdiction and other income 2.4 3.0 3.0
total operating income 251.1 223.9 242.4
net movement in accrued and deferred income 75.4 20.5 22.2
total income 326.5 244.4 264.6
staff and staff-related costs 193.1 220.0 210.1
professional fees 7.0 6.2 6.7
IT costs 6.6 7.3 7.3
premises and facilities 23.7 25.3 24.8
other costs 1.6 3.0 1.7
depreciation 7.7 6.0 6.5
bad debts 0.2 0.5 0.9
contingencies 0 2.0 0.0
total operating costs 239.8 270.3 257.9
operating surplus (deficit) 11.3 (46.4) (15.6)
accounting surplus (deficit) before tax 86.7 (25.9) 6.6

The figures above are drawn from our unaudited management accounts - and may be subject to change. We publish our directors’ report and audited financial statements on our website once they’ve been approved.