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annual review 2010/2011

1 April 2010 to 31 March 2011

what the complaints were about

new cases by area of complaint

type of complaint 2011 2010 2009 2008 2007
banking and credit 31.5%
(65,063 cases)
(71,700 cases)
(55,038 cases)
(69,238 cases)
(20,099 cases)
investments and pensions 7.5%
(15,483 cases)
(22,278 cases)
(22,265 cases)
(26,565 cases)
(58,563 cases)

insurance excluding PPI

(20,978 cases)
(19,838 cases)
(19,102 cases)
(16,634 cases)
(13,898 cases)
payment protection insurance (PPI) 51% (104,597 cases) 30%
(49,196 cases)
(31,066 cases)
(10,652 cases)
(1,832 cases)
new cases in total 206,121 163,012 127,471 123,089 94,392

year ended 31 March

what financial products the new cases involved

financial product %
payment protection insurance (PPI) 51
current accounts 10
credit cards 8.5
mortgages 3.5
consumer-credit products and services (eg hire purchase, debt collecting and catalogue shopping) 3.5
unsecured loans 3
motor insurance 3
savings accounts 2.5
buildings insurance 2
mortgage endowments 1.5
whole-of-life policies and savings endowments 1.5
pensions 1.5
"with-profits" and unit-linked bonds 1
stockbroking and portfolio management 1
travel insurance 1
contents insurance 1
other products 4.5

what issues the cases involved

insurance (including PPI): 61%

of which

  • complaints about sales and advice: 75%
  • complaints about claims: 20%
  • complaints about administration: 5%

banking and credit: 31.5%

of which

  • complaints about charges: 45%
  • complaints about administration: 28%
  • complaints about sales and advice: 8%
  • complaints about transactions: 5%
  • other complaints: 14%

investments and pensions: 7.5%

of which

  • complaints about sales and advice: 63%
  • complaints about administration: 30%
  • other complaints: 7%

new cases by financial product or service

new cases by financial product or service year ended
31 March 2011
year ended
31 March 2010
payment protection insurance (PPI) 104,597 49,196
current accounts
including complaints about
19,944 25,252
- financial hardship 9,713 13,213
- business bank-charges 1,359 2,265
- direct debits and standing orders 571 737
credit cards 17,466 18,396
consumer-credit products and services
in relation to activities covered by our consumer credit jurisdiction - including complaints about
7,250 6,329
- point-of-sale loans 2,765 1,735
- hire purchase 1,395 1,430
- credit broking 697 341
- catalogue shopping 582 755
- debt collecting 512 697
- store cards 480 574
- debt adjusting 302 231
- hiring, leasing and renting 221 283
- debt counselling 155 163
- credit reference agency 40 40
- home credit 34 41
mortgages 7,067 7,469
unsecured loans 5,820 6,285
motor insurance 5,784 5,451
savings accounts 4,783 5,033
other types of general insurance
including complaints about
3,904 3,275
- commercial vehicles and property 746 777
- pet insurance 438 462
- roadside assistance 300 226
- business protection insurance 204 222
- guaranteed asset protection ("gap") insurance 182 224
- caravan insurance 63 82
investment-linked products
including complaints about
3,784 6,329
- unit-linked bonds 849 2,453
- investment ISAs 824 1,301
- "with-profits" bonds 683 1,056
- "structured" products 550 273
- guaranteed-income bonds 408 595
- unit trusts 125 192
- PEPs 45 93
buildings insurance 3,469 3,437
whole-of-life policies and savings endowments 3,328 4,199
mortgage endowments 3,048 5,400
other banking services
including complaints about
2,733 2,987
- cash machines 878 964
- cheque clearing 691 773
- money transfer 529 606
- electronic payment 369 453
- safe custody 63 74
- foreign currency 55 43
including complaints about
2,706 3,594
- personal pension plans 1,407 1,727
- small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs) 472 475
- annuities 423 501
- SERPs 196 560
- income draw-down 66 158
- free-standing additional voluntary contribution (FSAVC) schemes 65 99
travel insurance 2,536 2,003
contents insurance 1,697 1,863
portfolio management 1,148 1,040
stockbroking 1,119 1,434
extended warranty insurance 895 863
income protection 720 776
legal expenses insurance 635 644
critical illness insurance 528 598
private medical insurance 506 652
including complaints about
350 233
- spread-betting 219 191
personal accident insurance 304 274
total number of new cases 206,121 163,012

what the complaints were about: insurance

Complaints about insurance made up 61% of the total number of new cases we received during the year (42% in the previous year). The number of new cases relating to insurance increased by 82% - from 69,034 in 2009/2010 to 125,575 in 2010/2011.

This increase largely resulted from the further 113% rise in the number of complaints about payment protection insurance (PPI) - from 49,196 in 2009/2010 to 104,597 in 2010/2011 - following a 58% rise in the previous year. This is the largest number of complaints we have ever received in a year about a single financial product.

We also saw a 27% increase in complaints relating to travel insurance and a 6% increase in complaints about motor policies. However, the number of complaints we received during the year about health and medical insurance fell by 13% and complaints about contents insurance dropped by 9%.

The table below shows how these insurance complaints were spread across different products and services.

type of complaint %
payment protection
motor 4.5
buildings 3
travel 2
contents 1.5
health and medical insurance 1.5
extended warranty 1
commercial and business protection 1
other (including legal expenses, pet and roadside assistance) 2.5

payment protection insurance (PPI)

year ended 31 March number of complaints
2011 104,597
2010 49,196
2009 31,066
2008 10,652
2007 1,832
2006 1,315

annual trend: +113%

In last year's annual review we reported a 58% increase in the volume of complaints referred to us about payment protection insurance (PPI). We also said we hoped that the regulator's proposals in relation to the handling of PPI complaints would be finalised as soon as possible - and that the improved complaints-handling processes subsequently put in place by businesses would result in a significant reduction in the volume of PPI complaints referred to the ombudsman service over the following year.

Unfortunately, the year did not turn out that way. In August 2010 the Financial Services Authority (FSA) introduced new complaints-handling guidance (its policy statement 10/12) about the assessment and redress of PPI complaints. Some businesses started to implement this guidance but a number of high-street banks decided to challenge it.

This meant that these banks started to issue standard letters to customers from autumn 2010, saying they were unable to decide PPI complaints while legal action was ongoing. This legal action took the form of a judicial review brought by the British Bankers Association (BBA) - on behalf of a number of high-street banks - against the FSA and the ombudsman service.

The judicial review took place in the High Court at the end of January 2011. It involved a challenge to the introduction of the FSA's guidance and to parts of the online technical resource on our website. Judgment was handed down by the High Court at the end of April 2011 - endorsing our approach, and that of the FSA, to handling PPI complaints. Just as this annual review was going to print, the BBA announced that it did not intend to appeal this judgment.

While awaiting the outcome, the banks that were challenging us stopped responding substantively to many thousands of complaints. Regrettably this led to delays and uncertainties for the consumers in these cases.

In most PPI disputes, there is not just one single question that determines the outcome of the complaint. There are often many issues involved. The way the policy was sold - and whether it was appropriate for the consumer - will be a matter of judgement in the individual circumstances of the case.

While the legal challenge against us has been ongoing, the volume of PPI complaints has soared - with up to 5,000 new cases being referred to us each week by March 2011.

This meant that in the financial year 2010/2011 we received a record 104,597 PPI cases - a 113% year-on-year increase. This is the largest number of complaints we have ever received in a year about a single financial product.

The FSA wrote to trade associations in January 2011 to remind them of the regulatory obligations on businesses in handling consumers' complaints, while awaiting the outcome of the legal challenge. We hope that this will result in improvements in the way businesses ensure they are complying with the relevant complaints-handling rules.

At the end of March 2010 we introduced new standard documentation for PPI disputes, to encourage more efficient, co-ordinated and consistent complaints-handling processes across the financial services industry and by claims-management companies. We have received positive feedback about these new complaint forms and how they can help the complaints-handling process.

However, during the year some claims-management companies began to take a disappointingly lax approach to completing the questionnaire on behalf of consumers. Where a form is completed inaccurately, or not at all, we may not be able to progress the complaint. We have made our position on this very clear to the claims-management companies in question.

The quality of the information provided by claims-management companies to support their clients' cases varies enormously. Some provide clear and cogent arguments on behalf of the consumer. Others simply make general allegations, some of which have no relevance to the individual dispute.

These same points can sometimes also be made about the information provided by financial businesses in the PPI complaints we see. Too often, the true facts of a case are adequately addressed only when the dispute is referred to the ombudsman service.

This can be frustrating and time-consuming. It does not help the parties in resolving the dispute fairly and as quickly as possible - which must be in everyone's interests.

During the year we also saw a small but growing number of cases where, after investigation, it emerged that no PPI policy had ever been in place. It is essential that businesses and claims-management companies make every effort to check this, before the matter is referred to the ombudsman service.

Where there is a dispute as to whether or not a PPI policy actually existed, it will help us resolve matters more quickly if the business or the consumer can provide strong supporting evidence - for example, by providing a copy of the relevant loan agreement or credit card statements. If either the business or the claims-management company appears to be acting unreasonably, we will refer these matters to the relevant regulator.

motor insurance complaints

year ended 31 March number of complaints
2011 5,784
2010 5,451
2009 6,267
2008 6,009
2007 4,230
2006 3,372

annual trend: +6%

After a substantial decline in the number of cases involving motor insurance in the previous year, complaints in the financial year 2010/2011 rose slightly - by 6%.

However, we were pleased to see fewer disputes about the approach insurers adopt to valuing vehicles that had been written-off - and to investigating complaints about the quality or timeliness of repairs to vehicles.

We believe this reduction reflects the constructive discussions we have had over the year with individual motor insurers and the Association of British Insurers (ABI), so that they better understand our long-standing general approach in these areas.

But some cases we see still show disappointing practice. Despite the publication in 2009 of our online technical note on vehicle valuation, we continue to see some insurers making offers to their customers that they should know are lower than they ought to be.

We also continue to uphold consumers' complaints about the thoroughness of insurers' investigations in relation to claims for stolen vehicles. In complaints we see, motor insurers often decline theft claims that they view as suspicious, without carrying out a proper investigation - for example, not pursuing obvious lines of enquiry about missing keys etc.

We often see insurers failing to give clear reasons for rejecting this type of claim - and not appearing to consider other possibilities for the theft.

If the insurer has carried out a thorough investigation, which indicates that the theft was unlikely to have occurred as the consumer claimed, we may support the insurer - or decide that the matter is better dealt with in court, where evidence can be given under oath and witnesses cross-examined.

However, the insurer cannot expect us to agree with them if they are relying simply on suspicion rather than on actual evidence. In these cases, we are likely to consider it reasonable to expect the consumer to have been interviewed, the vehicle to have been inspected and a report to have been obtained from security experts, where appropriate.

complaints about buildings and contents insurance

year ended 31 March buildings insurance complaints
2011 3,469
2010 3,437
2009 3,447
2008 2,669
2007 1,951
2006 1,951

annual trend: +1%

year ended 31 March contents insurance complaints
2011 1,697
2010 1,863
2009 1,671
2008 1,363
2007 1,238
2006 1,224

annual trend: -9%

During the year the overall number of complaints referred to the ombudsman service about household insurance (covering buildings and contents) fell by 2.5%.

The disputes we saw continued to cover a full range of issues, including claims relating to subsidence, floods, storm and fire damage, as well as theft and accidental damage. The most common cause of disputes continued to be the refusal of insurers to pay a claim.

However, complaints about the quality and timeliness of repairs also remained a significant part of our work in this area. Where insurers have chosen to repair damage under the terms of a policy, they should bear in mind that they will be responsible if those repairs are not of adequate quality. In cases we have seen, this has sometimes been unclear - and we have been left to interpret the position and work out who exactly is responsible for the repair.

We have also seen cases where there has been inconsistency around this issue - for example, where the consumer appointed the builder but the insurer then instructed the builder what to do. We can see in some cases that the insurer was simply trying to be helpful - but this can occasionally backfire on them.

It is sometimes said that the number of fraudulent insurance claims - relating both to household and motor policies - increases in recessionary times when money is tight. We have seen no direct evidence of this in the cases we have dealt with during the year. In our experience, disputes are less likely to arise where insurers investigate claims thoroughly and give consumers a proper opportunity to explain any apparent inconsistencies.

During the year we have seen an increase in the number of cases where entrenched attitudes on both sides - and a refusal by either party to conciliate or compromise - has led to a significant rise in the number of cases being referred to an ombudsman for a final decision. This may reflect the tougher economic times - and the amount of money at stake for the consumer.

However, we are disappointed to see some insurers challenging our views and requesting formal ombudsman decisions in areas where our approach is long-established - for instance, where household insurance disputes involve flood damage, unoccupied buildings, and matching sets of furniture or fittings.

In cases where this happens, we invite the insurer to make representations in the particular case. But where the ombudsman's overall approach has been the same for more than twenty years, the insurer's arguments need to be very persuasive in the particular circumstances.

travel insurance complaints

year ended 31 March number of complaints
2011 2,536
2010 2,003
2009 1,973
2008 1,628
2007 1,670
2006 1,787

annual trend: +27%

The number of travel insurance complaints referred to the ombudsman service during the year increased significantly - rising by 27%. The cases we received included complaints arising from delays and disruption caused by ash from a volcanic eruption in Iceland.

Given the scale of the problems this caused - with flights grounded across Europe for several weeks in some cases - the number of complaints we saw (around 700 cases) was significantly lower than some had expected. However, these cases raised important issues for the travel insurance sector.

As we have commented in previous annual reviews, travel policies probably remain the least well-explained and understood of the types of insurance that consumers are most likely to buy.

The insurance is often bought at the same time as a holiday. Attention is usually more focused on holiday arrangements than on what would happen if the consumer needed to claim for medical cover, delay or cancellation.

In the cases we see, few consumers took time to read the policy to ensure it really met their needs. So there can be some unpleasant surprises if claims are made.

Almost all the cases we see relating to travel insurance involve disputes over the payment of claims. The extension of our remit in January 2009, to enable us to look at complaints about the sale of travel insurance sold alongside a holiday or other travel, has resulted in only a small - though increasing - number of complaints.

Complaints about being mis-sold a travel policy often arise in the context of the "non-disclosure" of consumers' pre-existing medical conditions. Requiring consumers to speak to a medical helpline when buying insurance has led to welcome improvements in this area. But it has not solved all potential problems.

From the recordings of conversations that we listen to between consumers and insurance helplines - as part of our work resolving travel insurance disputes - it is clear that consumers can be greatly helped on issues involving pre-existing conditions, where there are adequate numbers of suitably qualified staff on the helpline.

However, we also listen to recordings of phone conversations where helpline staff have clearly not followed the script. In other cases, helpline staff have focused solely on the lead traveller, without asking questions about other fellow travellers whose health might also affect the insurance cover.

And we continue to see cases where the dispute turns on the "non-disclosure" of health issues relating to family members who were not travelling themselves - but whose ill health or death subsequently affected the plans of those who were travelling.

In the cases we see, we frequently come across travel policies where the information provided to the consumer is poor, compared with the standards of information in other types of policy. These may be relatively low-premium policies - but the consequences for a consumer of a travel claim being rejected can be catastrophic in some cases.

health and medical insurance complaints

year ended 31 March number of complaints
2011 1,754
2010 2,026
2009 1,874
2008 1,839
2007 1,959
2006 2,291

annual trend: -13%

The number of complaints we received about income protection, critical illness and private medical insurance all fell during the year - by 7%, 12% and 22% respectively.

We are pleased that some health and protection insurers continue to learn from complaints - and are committed to resolving complaints at the earliest stages, so that they do not have to be referred to us. We welcome dialogue with insurers to explain our approach and prevent the escalation of complaints generally.

Complaint numbers in this area may not be as high as they are in relation to some other insurance products. However, they are likely to involve consumers who are ill, bereaved or in other distressing circumstances. This is why we have a specialist team working on these cases, who are trained to handle these sensitive situations.

Specifically, we continue to see difficult cases involving people claiming insurance benefits when they are unable to work, either temporarily or permanently. These cases raise complex issues, particularly when the disability stems from problems in the workplace. Invariably these cases involve financial hardship.

what the complaints were about: banking and credit

Complaints about banking and credit made up 31.5% of the total number of new cases we received during the year (44% in the previous year). The number of new cases relating to banking and credit decreased by 9% - from 71,700 cases in the financial year 2009/2010 to 65,063 in the financial year 2010/2011.

This table shows how these banking and credit complaints were spread across different products and services.

type of complaint %
current accounts
credit cards 27
consumer-credit products and services (eg hire purchase, credit broking and catalogue shopping) 11
mortgages 11
unsecured loans 9
savings accounts 7.5
other banking services 4

current account complaints

year ended 31 March number of complaints
2011 19,944
2010 25,252
2009 13,682
2008 39,263
2007 8,061
2006 3,543

annual trend: -21%

In last year's annual review we commented on the number of complaints from consumers who told us that their current-account problems related to financial hardship they were experiencing.

During the year we continued to receive steady numbers of complaints involving hardship - 9,713 in total. These cases often involved consumers saying that charges applied to their current accounts had added to the problem.

Current-account providers must deal fairly with consumers in financial difficulty - though what is fair will depend on the individual circumstances of the case. In the complaints we see, reaching agreement on what type of help is appropriate in cases of financial difficulties is often made more challenging by the high expectations on both sides.

In many cases, the consumer (or their representative) will see a refund of charges and/or writing-off a debt as a basic requirement for a fair outcome. The current-account provider, on the other hand, may see the first step towards resolving the problem fairly as the consumer offering to make a substantial repayment of their debt.

Our approach to achieving a fair outcome in cases like this will normally involve one or more of a range of practical measures, reflecting the consumer's circumstances and means. These measures might include, for example, re-arranging long-term overdraft debt to more manageable terms, and reviewing the timings and amounts of direct debits, to break the cycle of unauthorised overdraft borrowing.

During the year our work in many cases has been hindered by the superficial approach to complaints handling taken by some current-account providers - who have often applied inflexible internal processes and rigid measures, regardless of the individual circumstances of each case.

Our work resolving disputes has also been made harder by the reluctance of some claims-management companies - acting on behalf of consumers - to provide us with the level of information we needed (or with any proper information at all, in some cases).

Consumers (and their representatives) can help by telling us what has triggered the problem and what they have already told their current-account provider about their circumstances. Current-account providers can help by telling us what help they have already offered the consumer, and why they believe that is enough in the circumstances.

Complaints about disputed plastic-card transactions relating to current accounts continued to form a significant part of our workload this year. These disputes involved transactions at cash machines and at point-of-sale machines at retail outlets, clubs and bars. The outcomes of complaints like this continue to turn mainly on practical issues relating to the particular facts of the case, rather than on specialist technical issues.

In some of the cases we have seen, the current-account provider has failed properly to take into account the rules relating to disputed withdrawals made from overdraft facilities - which the law treats differently from disputed withdrawals made from money in a current account.

Given the varying quality and accuracy of information on this topic, it is not surprising that some consumers find it difficult to understand what the rules about disputed transactions require both from financial businesses and consumers.

We have also seen a number of complaints this year about powers of attorney given by older consumers to others to act on their behalf. Many of these complaints suggest that some bank-branch employees struggle to understand the process and significance of different types of powers of attorney.

In particular, these employees may inappropriately ask for proof of the customer's mental capacity - or insist that the consumer completes or signs detailed paperwork, even though they have already given and registered a lasting power of attorney, allowing someone to deal with their finances for them. In extreme cases, the account may have been wrongly "frozen" because of lack of understanding about the effect of the particular type of power of attorney produced.

Similarly, we have seen some complaints about problems encountered by people who are legally entitled to act for consumers with learning difficulties - and have found that their bank is reluctant to provide certain services on the account, such as online or phone access. From the complaints we have seen, these problems appear to stem from inflexible procedures at branch level, rather than from "head office" policy.

credit card complaints

year ended 31 March number of complaints
2011 17,466
2010 18,396
2009 18,590
2008 14,123
2007 2,731
2006 2,124

annual trend: -5%

The number of complaints we received during the year about credit cards reduced slightly - but still remained at a high level.

A substantial number of these cases continued to involve disputes relating to section 75 of the Consumer Credit Act 1974 - under which the credit-card provider can be jointly liable with the supplier of the goods or services, if a consumer has a valid claim for misrepresentation or breach of contract.

Cases involving claims under section 75 included a wide range of transactions for the purchase of goods and services as diverse as home extensions, small business franchises, jewellery and motor vehicles.

We continued to see complaints from consumers who had used their credit cards to buy membership of "holiday clubs" - where they considered that the benefits of membership had proved to be less valuable than they had expected.

As we reported last year, in many of these cases we found that the business said by the consumer to have breached the contract - or made the misrepresentation - did not have the necessary legal connection to the business that actually received the credit-card payment. This means that section 75 cannot apply - so there could never be a successful complaint against the lender.

We also saw a number of complaints about special credit-card "deals" - relating, for example, to interest-free or low-interest periods - that came to an end because the consumer missed, or was late with, a monthly repayment.

We have often been able to arrive at informal settlements in these types of complaints - usually where the consumer is experiencing financial difficulty - with the lender agreeing a compromise solution, even though the contractual position was clear.

As in previous years, we saw a significant number of complaints involving so-called "default charges" on credit cards - which consumers have to pay if they miss a payment, make a late payment, or exceed their credit limit.

Complaints about disputed credit-card transactions continue to form part of our work, although the number of these cases has remained stable. These cases turn on practical issues relating to the individual facts and circumstances involved - and sometimes to the relevant law - rather than to any sophisticated technical issues.

We have seen fewer complaints this year about interest-rate changes on credit-card accounts - where the card issuer said the increase was "risk-based", to reflect market conditions. In the cases we see, consumers do not readily understand - given the historically-low Bank of England base rate - why the interest rate they are paying needs to increase. And card issuers have not always explained this issue well - or at all - in cases we have dealt with.

The "opt-out" that credit-card issuers offer to consumers who do not wish to continue with a higher rate of interest was widened during the year - to cover all interest rate increases (and not just those that relate to "risk-based" re-pricing). This should mean that the number of complaints we see about this issue will continue to reduce - particularly if card issuers give clear explanations for their reasons for increasing interest rates.

complaints about consumer credit

year ended 31 March number of complaints
2011 7,250
2010 6,329
2009 3,014
2008 849

annual trend: +15%

The number of complaints we received about consumer-credit products and activities increased significantly again during the year.

This means that our caseload in this area has grown almost nine-fold since the financial year 2007/2008.

That was when the range of credit-related complaints we cover was extended by law beyond loans and credit cards provided just by banks and building societies - which have been under our remit since we were first set up. Since 2007/2008 our jurisdiction has covered a wide range of other businesses involved in consumer credit, including loan firms, hire-purchase operators, debt collectors and catalogue-shopping companies.

During the year we continued to receive complaints about fee-charging "debt-management" businesses. These businesses undertake to liaise with the creditors of consumers who have problem debt, agreeing repayment arrangements and administering the monthly payments on the consumer's behalf.

In the cases we saw, consumers complained about poor explanations and lack of clarity as to what they were signing up for - leading to unexpected charges and disappointment when the debt-management plan did not achieve what the consumer had expected.

We also saw complaints about delays and poor administration by debt-management businesses when passing on payments to creditors - sometimes resulting in a significant worsening of the consumer's financial position, including court judgments obtained by creditors who had not received their payments.

We also started to see complaints about debt-management businesses offering to act on the consumer's behalf in making a claim against their creditors that their credit agreements were "unenforceable at law". Again, consumers complained to us that these businesses had not been clear about what they were promising to do and what it would cost.

In last year's annual review we wrote about complaints relating to credit broking - usually involving the credit-broking business taking an up-front fee for arranging consumer credit that it said was already sourced or agreed at a particular rate, but was never actually provided.

We have continued to see complaints about this during the year - resulting in complaints about credit broking more than doubling in number to 697 cases. In some of these cases, the credit-broking businesses complained about had already gone out of business - which meant that consumers had no way of getting their money back, even if we upheld their complaint.

We also saw a significant increase during the year - of 59% - in the number of complaints about point-of-sale loans that consumers had taken out to pay for goods or service - particularly training courses and holiday-club memberships. These are loans arranged through the provider of the goods or services - and can be used only to finance a specific purchase.

The money borrowed on the loan is paid out by the lender direct to the provider of the goods or services. Because of the underlying arrangements between the lender and the provider of the goods or services, the consumer may potentially have a claim against the lender under section 75 of the Consumer Credit Act 1974, if there is a problem with the purchase.

In cases we saw during the year involving point-of-sale loans, consumers often complained about training courses that they believed had not been provided in accordance with what they were entitled to under the contract. In some of these cases, the original trainer had gone out of business and the consumer had been offered a substitute.

Similarly, consumers also complained about holiday-club memberships that had not lived up to what they said they had been told, before they signed up, by the person selling them.

We upheld many - though not all - of the complaints we received about training courses. We were more likely to do so where a substitute course lacked a feature that was of importance to the consumer - or where we were satisfied that the provision of training at a specific time had been essential for the consumer.

The outcomes of complaints about holiday-club memberships were more varied. This was because in many cases we discovered that the business said by the consumer to have misled them did not have the necessary legal connection to the business that actually received the funds from the loan. This means that section 75 cannot apply - so there could never be a successful complaint against the lender.

We also received complaints during the year about the quality of motor vehicles - both new and used - bought using point-of-sale loans or hire purchase agreements. When we consider these types of complaints, we take account of evidence provided by the consumer and the business - to help us reach a view on whether the vehicle was of a reasonable standard. We do this in much the same way as a court would do.

In cases like this during the year, we often found that the lender or hire purchase business had simply relied on assurances from the dealer about the condition of the vehicle - rather than taking any real steps to satisfy itself as to whether the consumer had a valid complaint.

complaints about mortgages

year ended 31 March number of complaints
2011 7,067
2010 7,469
2009 7,602
2008 6,824
2007 4,366
2006 3,942

annual trend: -5.5%

The number of mortgage-related complaints we received fell slightly during the year - continuing the downward trend started in the previous year. The cases continued to involve the same types of issues - and broadly reflect the economy and the state of the mortgage market as a whole. Administrative errors remained the largest area of complaint.

We also saw an increase in the number of complaints from consumers whose applications to "port" their residential mortgage (in other words - transfer it to a new property) had been declined. In the cases we see, this often happens where - because of the tougher mortgage market in recent years - the lender has tightened their lending criteria, resulting in the consumer no longer meeting the required criteria.

It is unusual to see mortgage contracts that allow the consumer unconditionally to "port" their mortgage as a contractual right. Lenders vary in the flexibility they offer to consumers wanting to move and we do not set the lending criteria applied by mortgage lenders. But we can look at whether the lender has treated its customer fairly.

In our experience, it is helpful if a decision on lending is clearly communicated and explained - so that the consumer can understand why they do not qualify to "port" their loan. In some cases, where the individual circumstances warrant it, we may decide that a fair outcome is for the lender to waive an early repayment charge - rather than allowing the loan to be "ported".

We have also seen complaints during the year where the dispute involves the decision by a lender to significantly reduce the upper age-limit applying to the term of a mortgage - or to require the consumer to provide proof of retirement income.

Complaints about mortgage interest rates were less of an issue during the year. This probably reflected the low Bank of England base rate and the fact that, as fixed-rate mortgage products come to an end, some consumers were benefiting from historically-low variable rates.

The number of complaints about the handling of arrears remained at a similar level to the previous year. However, we continued to see a significant number of complaints about arrears charges applied by some lenders - and about lenders being inflexible, particularly when the consumer's circumstances or proposals did not fall into any of the standard categories forming part of their lender's normal approach.

Cases involving repossession remained a small part of our work. However, they continued to raise difficult and sensitive issues. A common theme was the lack of effective communication from the lender, once the property had been taken into possession.

The cases we dealt with involving repossession also frequently included complaints about delays - including delay in passing on surplus funds to other lenders who had legal charges over the property, and delay in providing the consumer with a final statement detailing the costs and expenses the lender had applied to the debt.

We also saw complaints about delays by the lender in confirming whether they intended to ask the consumer to pay any debt relating to shortfalls on the mortgage.

complaints about unsecured loans

year ended 31 March number of complaints
2011 5,820
2010 6,285
2009 4,242
2008 2,940
2007 1,755
2006 1,507

annual trend: -7.5%

Following substantial year-on-year increases in the number of complaints referred to us about unsecured loans, this year we saw a dip in these cases for the first time.

As in previous years, many of the complaints were from consumers who were experiencing financial difficulty and did not feel their lenders had treated them fairly.

In these cases, some lenders still relied on inflexible standard approaches when responding to cases of financial difficulty. This contrasted with our usual approach - which involves taking into account the consumer's individual circumstances, when assessing what would be fair treatment for them.

We continued to see some cases where consumers argued that their loan agreement was "unenforceable at law" - often based on wrong or misleading information on the internet and from other sources.

As the ombudsman service is not a court of law, we have no power to declare a loan agreement "unenforceable". And the remedy that many of these consumers sought - that we should direct the lender to write off the debt - would not, in any case, generally be available to them under the law.

We also received complaints about the rates of interest that lenders were applying to variable-rate loans - which consumers found confusingly high when compared with the historically-low Bank of England base rate.

In many of these complaints, the consumers felt that their lender had seemed unable (or unwilling) to explain the high interest rate in a way that made sense to them - and that also persuaded them that the lender had taken proper account of the loan's terms and conditions.

complaints about savings accounts

year ended 31 March number of complaints
2011 4,783
2010 5,033
2009 5,183
2008 2,675
2007 1,438
2006 1,233

annual trend: -5%

The number of complaints about savings accounts fell slightly again in the financial year 2010/2011- continuing the downward trend of the previous year.

Most consumers who complained to us were concerned about problems with poor administration by some savings-account providers - in particular, delays in opening accounts and in transferring balances between providers.

From 2011 there is a new maximum time limit of 15 working days for transfers of individual savings accounts (ISAs). This may reduce problems in this area - although not all the complaints we received about delay involved ISAs.

Consumers also complained to us in cases where they felt savings-account providers had not given them clear enough information on the "cut-off" date for opening fixed-rate products - and on how long they had after that date to put the maximum amount of money allowed into their account. As consumers are only allowed to open one ISA account in each tax year, clarity about this is particularly important.

We received a number of complaints from consumers who had not realised how much the interest rate on their savings accounts had gone down - until they received their annual interest payment and compared it with previous years' payments.

Because of the timing and amount of the reductions over a period of time, these consumers had not been entitled to receive personal notification of the interest-rate changes in question - so had not fully appreciated what had happened.

complaints about other banking services

year ended 31 March number of complaints
2011 2,733
2010 2,987
2009 2,725
2008 2,643
2007 1,748
2006 1,360

annual trend: -8.5%

In last year's annual review we mentioned the faster payments service for payments over the internet and by phone. Introduced in the banking sector in 2008, this new faster process continues to reduce the number of complaints we see about delays in payments getting through the system.

However, we have started to see more complaints about payments that have been "misapplied" because of a mistake by the person sending the money (for example, entering the wrong account number on a transfer form or in an online transaction).

Where a consumer makes an error in the account number of the intended recipient, the bank receiving the payment will use that incorrect number - and not the recipient's name - to allocate the payment.

In some cases, usually where the payment has been made using internet banking, we have decided that the bank could have given a clearer and more prominent warning that it would rely on the account number and not the name.

We continued to receive a steady stream of complaints involving international money transfers. As in previous years, the complaints we saw related to costs, delays and currency problems. In particular, consumers were frequently uncertain about how the costs of the transfer would be apportioned.

In last year's annual review we mentioned complaints where consumers - often students - had been duped into drawing money from their accounts in return for a cheque that turned out to be fraudulent.

This year we saw a variant on this - with the consumer receiving money into their account through online banking and transferring it straight away to the fraudster. This money later turns out to have been paid from the account of an earlier victim of the fraudster. When the fraud is discovered and the money is clawed back by the initial victim, the second victim is left out of pocket.

From the complaints we have seen like this, many consumers do not fully realise that it is just as important to be certain about the origin of money paid into their account electronically as it is to be vigilant about cheques that they are given.

what the complaints were about: investments and pensions

Complaints about investments and pensions made up 7.5% of the total number of new cases we received during the year (14% in the previous year). We received 15,483 investment and pension-related cases - 30% fewer than in the previous year.

We saw a fall in the number of investment-related complaints across almost all product areas. The largest drop was in the number of mortgage endowment complaints - which fell by a further 44%.

For the first year since we were set up, mortgage endowments are no longer the most complained-about investment product. From a peak of 69,737 cases in 2004/2005 - accounting for 63% of all cases we received that year - we received just 3,048 mortgage endowment complaints in 2010/2011 (representing only 1.5% of our workload).

This table shows how these investment and pension-related complaints were spread across different products and services.

type of complaint %
whole-of-life policies and savings endowments 21.5
mortgage endowments 20
personal pension plans 9
portfolio management 7.5
stockbroking 7
unit-linked bonds 5.5
investment ISAs 5.5
"with-profits" bonds 4.5
"structured" products 3.5
small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs) 3
guaranteed-income bonds 2.5
annuities 2.5
derivatives (including spread-betting) 2
unit trusts 1
other products 4

complaints about investment-linked products

year ended 31 March number of complaints
2011 3,784
2010 6,329
2009 5,798
2008 2,750
2007 3,644
2006 5,810

annual trend: -40%

As we have commented in previous annual reviews, periods of market volatility tend to result in increased numbers of complaints referred to us about the mis-sale of investments, where the product concerned may be too risky for the consumer.

We do not usually, of course, deal with complaints that are just about the performance of any investment.

So the fact that the number of new complaints about investment-linked products fell significantly during the year doubtless reflected the generally improved performance of the financial markets.

Instead, our investment workload this year has been marked by long-running disputes stemming from the poor market conditions in earlier years. These cases frequently involved major financial institutions - and the disputes have been fiercely contested.

For example, we dealt with several hundred complaints against a major high-street business - which involved medium- and high-risk products being mis-described and inappropriately sold to consumers.

Despite receiving final decisions on the key issues, the business resisted settling individual cases without the direct intervention of an ombudsman. Although the business did, eventually, agree to deal with the remaining cases on the same basis that the ombudsman had directed, it was disappointing that consumers were both delayed and inconvenienced.

Other disputes we have seen this year have also been characterised by the businesses involved taking entrenched positions - and showing reluctance to accept what appeared to us to be clear evidence of mis-selling.

This is reflected in the increased proportion of complaints involving investment bonds which we upheld in favour of the consumer. This figure rose to 60% during the year.

Another high-street financial services business sold large numbers of a complex investment product to investors in its local branches. We found it unlikely that many of these consumers would have made these investments, if they had understood the nature of the product - which was later described by the regulator as unsuitable for retail investors.

The business produced "expert evidence" that the risk was mitigated by certain factors. We considered this evidence carefully but were not persuaded to change our initial view. Consumers whose financial experience had previously extended only to deposits and savings did not seem to us to be likely customers for esoteric investment products.

The evidence here of businesses taking a more legalistic approach to consumer complaints is disappointing. We refer to this elsewhere in this annual review. The ombudsman provides an alternative to the courts in dealing with consumer complaints. We want to resolve disputes without matters becoming deeply adversarial and entrenched.

Other financial businesses have taken a more pragmatic view and have worked with us constructively at the earlier stages of our complaints process, to resolve complaints without requiring their customers to await a final decision from an ombudsman.

During the year we continued to receive complaints about the make-up and description of investment funds. Consumers continued to complain to us that the description of some funds as "cautious" failed to reflect the real risks involved. In particular, consumers complained about the use of the word "cash" as a description of a fund, since they felt this implied a safe deposit, with no appreciable risk to capital.

Risk is at the heart of most investment complaints we see. So we are pleased that this issue is now being considered more widely by the regulator and trade associations. Recognising that consumers may put a literal interpretation on a word like "cautious" is a useful - and perhaps overdue - step towards applying terminology that cannot be misunderstood.

complaints about whole-of-life policies and savings endowments

year ended 31 March number of complaints
2011 3,328
2010 4,199
2009 3,515
2008 3,211
2007 3,734
2006 4,163

annual trend: -21%

Cases referred to the ombudsman service during the year about whole-of-life policies continued to include complaints about reviews of "reviewable" whole-of-life policies - where the original assumptions (particularly in relation to investment returns) had not been met, resulting in either a reduction in the consumer's life cover or an increase in their premiums.

As with all investment products, we frequently see complaints about the level of risk in relation to the funds chosen to support the life cover - as well as complaints that the policy was not suitable for the consumer in their particular circumstances. We also continue to see complaints about businesses failing to carry out reviews at the correct time.

In these cases a key consideration is the prominence of information given to consumers at the outset - warning that this type of policy would be subject to review and explaining what this could mean for the consumer.

Where we uphold complaints in relation to whole-of-life policies, the redress can range from our directing the business involved to refund premiums paid by the consumer (with or without a deduction for life cover) to telling the business to provide guaranteed cover (or cover on another basis).

During the year we continued to receive a steady stream of complaints from consumers who were disappointed with the returns on their savings endowment plans - and who told us they had expected a better return from these products than they would have received from a deposit account.

As we have commented in previous annual reviews, savings endowment plans can be inflexible products that may need to be held for many years before they produce a worthwhile return.

So in looking at complaints about these plans, we do not usually consider them suitable for people such as those approaching retirement, who have a limited "time horizon" for investing.

complaints about mortgage endowments

year ended 31 March number of complaints
2011 3,048
2010 5,400
2009 5,798
2008 13,778
2007 46,134
2006 69,149

annual trend: -44%

In last year's annual review we reported that the number of mortgage endowment complaints had continued to fall, albeit at a much gentler pace than in previous years.

During the financial year 2010/2011 we saw a further fall, with new cases slowing down to a rate of fewer than 60 each week. At the peak of complaints about mortgage endowments, in 2005, we were receiving up to 1,500 cases a week. So the current volumes are very low by comparison and now represent just 1.5% of our overall workload - from a peak of 63% of our workload in 2005.

However, mortgage endowments still remain one of the most complained-about investment products. And for many people referring complaints to us, the real difficulties caused by mortgage "shortfalls" are now starting to bite - as endowment policies they took out in the mid- to late 1980s, to repay their mortgage, are now maturing.

The majority of complaints about mortgage endowments where the time limits for complaining have not yet expired - and which we are therefore able to assess - continue to centre around the risks of the policy. This involves our deciding - in each individual case - whether the financial business did enough to help the consumer understand the risk that the policy might not perform well enough to pay off the mortgage.

Very large numbers of consumers have taken action over the last decade to deal with any potential shortfall when their endowment policy matures. This has included making complaints - and being paid compensation where appropriate. But we still continue to see complaints from consumers who are confused and disappointed when their endowment policy matures with a shortfall.

In last year's annual review we highlighted complaints about the information that businesses give consumers when their policy is close to maturity. During the year we continued to see complaints where consumers say they were confused by this information.

complaints about pensions

year ended 31 March number of complaints
2011 2,706
2010 3,594
2009 4,825
2008 5,297
2007 3,687
2006 4,053

annual trend: -25%

The number of complaints we received about pensions during the year continued the recent downward trend - and fell by a further 25%.

However, these cases often involve a number of complex issues with potentially large amounts at stake. The consumers involved tend to be more sophisticated and the businesses more specialist - with both sides usually putting forward highly technical arguments.

Where we uphold a pension-related complaint, putting matters right is generally not easy - with tax implications and restrictions on paying money into pensions to be taken into consideration. All this means that these complaints can be among the most difficult and time-consuming disputes we deal with.

Cases involving pensions also frequently have more than £100,000 at stake - the maximum amount of compensation we can tell a business to pay. Businesses may agree to settle any recommendation we may make above this level - but the recommendation itself is not legally binding on them.

A High Court case decided during the year has clarified that once an ombudsman's decision has been accepted, the case cannot then be taken to court in relation to any amount above £100,000.

Separately during the year, the FSA consulted on raising from £100,000 to £150,000 the maximum amount of compensation we can tell a business to pay.

The range of pension-related complaints we dealt with during the year was very wide, involving many different issues. During the year we continued to see complaints about advice on selecting investments within a pension fund; delays in setting up annuities; taking pension benefits using income draw-down (sometimes known as unsecured pension or pension fund withdrawal); and "switching" (transferring pension funds from one policy to another), particularly into self-invested personal pensions (SIPPs).

complaints about stockbroking and portfolio management

year ended 31 March number of complaints
2011 2,267
2010 2,474
2009 2,078
2008 1,209
2007 1,052
2006 975

annual trend: -8%

In last year's annual review we reported a significant number of complaints about high-pressure selling by a number of stockbroking firms - one of which had been responsible for 10% of complaints to us in this area. When this firm, and several others like it, subsequently went out of business, we referred complaints that consumers had brought to us to the Financial Services Compensation Scheme (FSCS), as the fund of last resort.

These particular complaints - together with the volatility of the markets over that period - resulted in the volume of complaints to us in this area rising sharply between 2008 and 2010. As we had anticipated, the number of new cases has now eased, largely reflecting the relative recovery of the markets in recent times.

However, during the year we continued to receive complaints from consumers who were unhappy with the way in which their brokers and portfolio managers had responded to changing market conditions.

We also received a number of complaints from investors who lost money in funds which were financially backed by the failed investment bank, Lehman Brothers - or which were affected by the investment fraud carried out by the convicted US financier, Bernard Madoff.

We were careful to decide these cases on the basis of our usual approach where negligence is claimed - looking at the individual circumstances at the time of the sale or advice, without using any hindsight.