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annual review 2010/2011

1 April 2010 to 31 March 2011

who the complaints were about

businesses complained about - by sector

financial services sector %
banks 65.5
general-insurance intermediaries 9.5
general insurers 9
life insurance and investment product-providers 5
mortgage intermediaries 3.5
building societies 2
businesses with a consumer-credit licence 2
independent financial advisers (IFAs) 1.5
other (including fund managers and stockbrokers) 2

The proportion of cases we dealt with in the financial year 2010/2011 that related to banks rose from 61% to 65.5%. This reflected the 113% increase in the volume of complaints about payment protection insurance (PPI) during the year.

The rise in the proportion of cases involving general-insurance intermediaries from 8% to 9.5% also largely related to the increasing PPI caseload.

The proportions of cases involving life insurance and investment product-providers, and independent financial advisers (IFAs), continued to decline - from 8% to 5%, and from 2% to 1.5%, respectively - reflecting the 30% fall in the number of complaints to the ombudsman service about investments and pensions.

financial products most frequently complained about - by sector

These tables show how new complaints involving the products most frequently complained about to the ombudsman service were spread across the different sectors of the financial services industry.

complaints about banking and credit %
banks 80
mortgage intermediaries 8
businesses with a consumer-credit licence 6
building societies 2
other 4
complaints about mortgages %
banks 68
mortgage intermediaries 16
building societies 8
other (including IFAs) 8
complaints about general insurance (excluding PPI) %
general insurers 73
insurance intermediaries 13
life insurance & investment product-providers 7
banks 3
Society of Lloyd's 1
other (including cash-plan health insurers) 3
complaints about payment-protection insurance (PPI) %
banks 77
insurance intermediaries 17
general insurers 2
building societies 2
other 2
complaints about investment products %
life insurance & investment product-providers 44
banks 21
independent financial advisers (IFAs) 14
stockbrokers and fund managers 9
building societies 5
other (including friendly societies and credit unions) 7
complaints about pensions %
life insurance & investment product-providers 53
independent financial advisers (IFAs) 25
banks 9
other (including building societies and stockbrokers) 13

outcome of cases - by sector

Earlier on in this annual review we show the outcome of complaints in relation to the financial products we receive most complaints about. For these products, the proportion of cases we upheld in favour of consumers ranged from 28% to 66%.

We also refer to the six-monthly sets of data published on our website - relating to the 150 or so individual businesses that together generate around 90% of our complaints workload. This data shows the number of new complaints - and the proportion of complaints we upheld in favour of consumers - for each of these businesses.

The table below shows the outcome of cases in the financial year 2010/2011 - by sector.

% of complaints where the outcome changed as a result of our involvement ("we upheld the complaint") %
banks 52
general insurers 46
life insurance and investment product-providers 33
intermediaries selling PPI 80
intermediaries selling general insurance 40
intermediaries selling banking and/or mortgage products 41
independent financial advisers (IFAs) 53
building societies 22
businesses with a consumer-credit licence 50

how often do businesses have complaints about them referred to the ombudsman?

  • 2,131 businesses each had 1 complaint referred to the ombudsman service during the year
  • 558 businesses each had 2 complaints to the ombudsman
  • 227 businesses each had 3 complaints to the ombudsman
  • 496 businesses each had between 4 and 10 complaints to the ombudsman
  • 180 businesses each had between 11 and 20 complaints to the ombudsman
  • 146 businesses each had between 21 and 50 complaints to the ombudsman
  • 70 businesses each had between 51 and 100 complaints to the ombudsman
  • 63 businesses each had between 101 and 250 complaints to the ombudsman
  • 37 businesses each had between 251 and 500 complaints to the ombudsman
  • 40 businesses each had more than 500 complaints referred to the ombudsman during the year

Customers of over 100,000 businesses that provide financial services have the statutory protection of the Financial Ombudsman Service, should a dispute arise.

This includes 80,000 businesses with a standard consumer-credit licence issued by the Office of Fair Trading (OFT); banking, mortgage, investment and insurance firms regulated by the Financial Services Authority (FSA); and also National Savings & Investments (NSI).

These businesses range in size from global financial services groups to sole traders providing credit as a sideline to their main business. This range in size is reflected in the number of complaints we receive about the different businesses we cover - which followed a very similar pattern during the year to previous years.

  • 10 financial services groups accounted for 73% of new cases
  • the next 22% of cases were from 267 businesses
    (with between 20 and 1,000 cases each)
  • the remaining 5% of cases were from 3,592 businesses (with 20 or fewer cases each)

In the financial year 2010/2011, fewer than 4% of the total number of businesses covered by the ombudsman service had complaints referred to us.

Four of the UK's largest financial services groups accounted for 105,365 cases (51% of all the complaints we received). At the other end of the scale, 124 cases (0.1% of all complaints) related to friendly societies (183 in the previous year) and 30 complaints involved credit unions.

During the year we published complaints data showing the number of new cases, and uphold rates, for each of the 150 or so financial businesses that together generate some 90% of our workload.

2,916 businesses - out of the 3,948 in total that had complaints referred to the ombudsman service during the year - had fewer than four complaints. This meant that 74% of businesses with complaints referred to the ombudsman service paid no case fees - as again we did not charge for the first three complaints during the year.

how do businesses rate the service we provide?

We carry out quarterly surveys on how the businesses we deal with rate the level of service we provide. These surveys cover all sectors of the financial services industry, ranging from sole-proprietor businesses to the largest financial groups.

  % who agree % who express no view % who disagree
the financial services industry can have confidence in the ombudsman service 44 32 24
our service is good value for businesses who pay the levy/case fees that fund us 35 38 27
our decisions on cases are fair and unbiased 55 27 18
our decisions are consistent 36 30 34
we provide a good dispute-resolution service for businesses 61 23 16

On average, the proportion of businesses agreeing with these statements about our service slipped back during the year. However, around a third of businesses were unable or unwilling to express views on issues widely considered to be of key interest to the financial services industry - namely the consistency of our decisions and our value for money.

And the overall proportion of businesses agreeing that our decisions are fair and unbiased - and that we provide a good dispute-resolution service for businesses - is higher than the proportion of cases in total where we did not uphold the case and where we agreed that businesses had done nothing wrong. This suggests that the way businesses rate these aspects of our service may not be entirely determined by the outcome of complaints.

liaison with financial businesses and trade associations

External-liaison work we have carried out during the year with the financial services industry includes training and guidance on complaints-handling and the work of our technical advice desk in supporting and educating businesses on complaints prevention.

During the year we have recorded feedback from businesses on what they think about the ways in which we share information with them about our work settling disputes - and which one of our external-liaison support services they most value.

which of our support services do businesses value? %
our website (including our online technical resource) 21
our technical advice desk 21
publications (including our quick guides for businesses) 19
ombudsman news 18
conferences and seminars 11
visits and training 10

We also run a relationship-management programme involving the 35 financial services groups that together accounted for 85% of complaints referred to the ombudsman service during the year. This includes establishing constructive relationships between ourselves and the businesses concerned, at both operational and strategic level, to ensure that the significant caseloads involved are managed as effectively and efficiently as possible.

For smaller businesses, we have a team of relationship managers with regional responsibilities - who work closely with local branches of trade bodies and provide a named point of contact for businesses in each area.

Our relationship managers also run our introduction to the ombudsman seminars across the UK, where smaller businesses - who are otherwise less likely to have direct contact with us - can meet us and ask questions face-to-face.

"... we have more formal arrangements for strategic dialogue with the financial services industry"

As well as the regular contact we have with businesses and their trade associations at this operational level, we have also always had more formal arrangements in place for strategic dialogue with the financial services industry.

Following consultation with industry stakeholders, we replaced the three sectoral liaison-groups (for banking, insurance and investment) - that had provided a channel for more formal communication between the ombudsman service and the industry since 2000 - with a small cross-sector industry steering group and a wider cross-sector industry panel.

These changes involved our chairman, Sir Christopher Kelly, chairing the high-level steering group which brought together eight chief executives of key financial services institutions. Through this group, and in other high-level industry meetings, we have discussed strategic issues such as major trends in complaints and the mechanisms for handling "mass claims" from consumers.

Membership of the wider cross-sector industry panel includes all the organisations previously represented on the three former industry liaison-groups - with additional members from consumer credit, electronic money and payment services.

The industry panel comprises around 200 financial services practitioners and officials from 30 trade associations. The panel covers issues such as complaints involving a particular product, sector, or type of financial business - or particular complaints-handling process issues.

We keep in regular contact with the industry panel through a fortnightly email newsletter and a series of events, including specialist seminars on complaints-related topics and meet the ombudsman Q&A sessions.