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annual review 2012/2013

1 April 2012 to 31 March 2013

who the complaints were about

businesses complained about - by sector

financial services sector %
banks 76
general-insurance intermediaries 6
general insurers 5.5
building societies 4.5
life insurance and
investment product-providers
mortgage intermediaries 1.5
businesses with a consumer credit licence 1
independent financial advisers (IFAs) 1
other (including fund managers and stockbrokers) 1.5

The proportion of disputes relating to banks rose substantially - from 65.5% of all cases to 76%. This continued to reflect the volume of complaints about payment protection insurance (PPI) during the year.

The proportions of cases involving all other sectors fell during the year - with the exception of building societies, where PPI complaints led to cases rising from 3.5% to 4.5%. Disputes involving IFAs - as a proportion of our total caseload - remained at 1%.

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 payment-protection insurance (PPI) %
banks 84
insurance intermediaries 7
building societies 5
general insurers 2
other 2
complaints about general insurance (excluding PPI) %
general insurers 59
insurance intermediaries 15
banks 14
life insurance & investment product providers 8
Society of Lloyd's 1
other (including cash-plan health insurers) 3
complaints about banking and credit %
banks 80
businesses with a consumer credit licence 8
mortgage intermediaries 6
building societies 2
other 4
complaints about mortgages %
banks 69
mortgage intermediaries 15
building societies 8
IFAs 2
other (including non-bank mortgage providers) 6
complaints about investment products %
life insurance & investment product providers 45
banks 30
IFAs 14
stockbrokers and fund managers 3
building societies 3
other 5
complaints about pensions %
life insurance & investment product providers 55
IFAs 21
Banks 9
other 15

outcome of cases - by sector

Earlier 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 23% to 65%.

We also refer to the six-monthly sets of data published on our website - relating to just under 200 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.

This uphold rate varied substantially from business to business during the year - from 3% to 100%.

The table below shows the outcome of cases in the financial year 2012/2013 - by sector.

% of cases we upheld - by sector %
intermediaries selling PPI 74
banks 51
businesses with a consumer credit licence 51
general insurers 49
intermediaries selling general insurance 49
independent financial advisers (IFAs) 42
intermediaries selling banking and/or mortgage products 38
life insurance and investment product-providers 25
building societies 17

how the complaints referred to us were spread across the businesses we cover

  • 2,666 businesses each had 1 complaint referred to the ombudsman service during the year
  • 768 businesses each had 2 complaints to the ombudsman
  • 366 businesses each had 3 complaints to the ombudsman
  • 735 businesses each had between 4 and 10 complaints to the ombudsman
  • 236 businesses each had between 11 and 20 complaints to the ombudsman
  • 199 businesses each had between 21 and 50 complaints to the ombudsman
  • 95 businesses each had between 51 and 100 complaints to the ombudsman
  • 79 businesses each had between 101 and 250 complaints to the ombudsman
  • 35 businesses each had between 251 and 500 complaints to the ombudsman
  • 70 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, if a dispute arises. 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 Conduct Authority (previously the FSA).
  • National Savings & Investments (NS&I).

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.

  • four banking groups accounted for 62% of new cases
  • the next 35% of cases were from 358 businesses
  • the remaining 3% of cases were from 4,819 businesses
    (with 25 or fewer cases each)

In the financial year 2012/2013, around 5% of the total number of businesses covered by the ombudsman service had complaints referred to us.

Four of the UK's largest banking groups accounted for 314,604 cases (138,848 in the previous year) - 62% of all the complaints we received (52.5% in the previous year).

At the other end of the scale, 266 cases (0.1% of all complaints) related to friendly societies (182 in the previous year) and 222 complaints involved credit unions (79 in the previous year).

During the year we published complaints data showing the number of new cases, and uphold rates, for just under 200 financial businesses that together generate some 90% of our workload.

3,800 businesses - out of the 5,249 in total that had complaints referred to the ombudsman service during the year - had fewer than four complaints. This meant that 72.5% of businesses with complaints referred to the ombudsman service paid no case fees - because again we did not charge for the first three complaints during the year.

In January 2012 we launched public consultation on proposals for new case fee arrangements. These new arrangements came into effect in April 2013 and involve:

  • Increasing the number of free cases from 3 to 25 for the majority of businesses that have the lowest number of complaints referred to the ombudsman service (so that only 1% of businesses are expected to pay any case fees at all).
  • Developing a new group-account arrangement for the four largest banking groups that together account for around 60% of our costs.

how managers working in financial businesses rated our service

  % who agree % who express no view % who disagree
the financial services industry can have confidence in the ombudsman service 48 25 27
our service is good value for businesses
who pay the levy/case fees that fund us
45 32 23
our decisions on cases are fair and unbiased 43 26 31
our decisions are consistent 38 27 35
we provide a good dispute-resolution service for businesses 49 27 24

how complaints handlers working in financial businesses rated our service

  % who agree % who express no view % who disagree
we handle complaints efficiently and professionally 76 21 3
we get to the bottom of complaints and deal with the issues thoroughly 77 11 12
our decisions are fair and unbiased 74 13 13
we settle disputes within an acceptable length of time 55 24 21
general satisfaction with our service 71 16 13

We carry out regular surveys to see 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 the largest financial groups to smaller businesses that only rarely have complaints referred to us.

Our surveys specifically target two different groups of people working in financial businesses. One group involves management - for example, heads of compliance, customer service managers, legal advisers and company secretaries. We may not work with these people regularly in our casework.

The other group involves the people at financial businesses who handle individual complaints and are more "hands on" in their relationship with us.

The feedback from these two groups is usually different. The views of managers tend to be influenced more by wider issues in regulation and the law than the views of their employees - who work with us at a more practical level on individual cases.

For example, during the year the proportion of managers in financial businesses who felt that our decisions on cases are fair and unbiased fell from 52% to 43%. This compared with 74% of frontline complaints handlers - who also rated us highly on dealing with the issues thoroughly and handling complaints professionally.

However, the proportion of managers who said we are good value increased - from 40% to 45%. This may reflect our new proposals for changing our case-fee structure for businesses. These proposals - which came into force in April 2013 following consultation in the previous year - mean that only 1% of businesses are likely to pay case fees in future.

Almost three out of ten managers in financial businesses appeared to have no particular views on issues widely considered to be of key interest to the financial services industry - most significantly, on whether our service provides value for money.

engagement with financial businesses and trade associations

As part of our external liaison work with financial businesses we have providing training and guidance on complaints handling - and our technical advice desk has supported businesses in complaints prevention.

During the year we recorded feedback from businesses on what they think about the way 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 businesses valued most %
our website (including our online technical resource) 29
ombudsman news 24
our technical advice desk 22
other publications (including our quick guides for businesses) 17
events and seminars 8
queries businesses raised with our advice desk %
our approach to insurance complaints 35
our approach to banking & credit complaints 29
our casework procedures 18
our approach to payment protection insurance (PPI) 13
our approach to investment complaints 5

a motor insurer phoned our advice desk

... asking for a steer on how best to deal with a customer who had recently taken out car insurance with them. When the customer had bought the policy, he had asked the insurance company not to get back in touch before 25 December. He had explained that this was because the car was a gift for his daughter - and he did not want her to know anything about it before the car was delivered on Christmas day.

Unfortunately, the insurer did phone before Christmas - to try to sell some add-on insurance. Overlooking the note on their system, they asked to speak to the new policyholder - the man's daughter. Angry at the Christmas surprise being spoilt, the customer was now demanding that the insurer give him the £800 insurance for free as compensation.

what we said
The insurer accepted that this was entirely their mistake. They said they had apologised unreservedly to their customer for what had happened. In the circumstances we felt that their proposed offer of £300 compensation seemed reasonable.

an advice worker at a community law centre phoned our advice desk

... about a client she had just visited in prison. The client was about to be deported to Jamaica because he had no valid visa. His bank was refusing to release money to him from his account, unless he went in person to his branch.

what we said
From what the advice worker told us, we agreed that the bank's requirement seemed unreasonable in these circumstances. We explained how the advice worker could take the matter forward on behalf of her client as a formal complaint against the bank - escalating the matter to us if she needed to.

an insurance company emailed our advice desk

... to talk through a claim they had received from a customer whose car had been damaged by mice. The mice had chewed through the wiring behind the dashboard. The insurer wondered whether they could reject the claim by relying on a clause in the policy that excluded electrical damage.

what we said
We suggested that this did not sound like electrical damage. So had the mice "vandalised" the car? - the insurer then asked. We suggested that a more commonsense approach might be to describe what had happened as accidental damage - and the insurer agreed.

Our advice desk handled a record 23,381 enquiries from professional complaints handlers during the year - a 21% increase on the 19,281 enquiries in the previous year.

84% of these calls were from businesses and 10% from community workers and consumer advisers. The other enquiries were from a range of users and stakeholders including researchers and trade associations.

During the year, 72% of people who used the advice desk said they were "very satisfied" with the service - with a general satisfaction rate of 98%.

For smaller businesses, we also have an outreach team who work closely with trade associations and networks both nationally and regionally.

Our outreach team run our meet the ombudsman seminars, where smaller businesses - who are otherwise less likely to have direct contact with us - can meet us and ask the ombudsman questions face-to-face.

During the year we met smaller businesses at events we hosted across the UK in:

  • Belfast
  • Birmingham
  • Bristol
  • Cardiff
  • Exeter
  • Glasgow
  • Leeds
  • London
  • Manchester
  • Newcastle
  • Nottingham
  • Southampton

91% of the smaller businesses who took part in one of these events said that it had given them a better understanding of complaints handling and the role of the ombudsman - which would change the way they approached customer complaints in future.

For the largest financial services groups that account for most complaints referred to the ombudsman service, we run a tailored relationship-management programme. This includes establishing constructive relationships at both operational and strategic level to ensure that the significant caseloads involved are managed as effectively and efficiently as possible.

... this involves constructive relationships at both operational and strategic level

At an operational level, we also run an industry panel involving 300 financial services practitioners and officials from 30 trade associations.

We keep in regular contact with this industry panel through a monthly email newsletter and a series of events, including conferences and workshops on complaints-related topics - for example, assessing travel claims, motor insurance disputes and compensation for distress and inconvenience.

As well as working with businesses and their trade associations at an operational level, we also work more strategically with the financial services industry through more formal arrangements. These include a cross-sector steering group, chaired by our chairman and made up of chief executives of key financial services institutions.

At the four meetings we held during the year with this steering group - and at other high-level industry meetings - we discussed strategic issues including our funding mechanism and major trends in complaints. Minutes of the various meetings of the steering group are available on our website.