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annual review 2014/2015

1 April 2014 to 31 March 2015

what the complaints were about

new cases by area of complaint

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

year ended 31 March

new cases by financial product

payment protection insurance (PPI) 63
complaints about all other financial products 37

new cases involving financial products other than PPI

current accounts 28
mortgages 10
credit cards 7
consumer-credit products and services
(eg hire purchase, debt collecting and catalogue shopping)
motor insurance 6
unsecured loans 5
buildings insurance 3.5
pensions 3.5
mortgage endowments 2
savings accounts 2
term assurance 2
travel insurance 2
whole-of-life policies and savings endowments 2
contents insurance 1
“with-profits” and unit-linked bonds 0.5
other products 18.5

what issues the cases involved

payment protection insurance (PPI): 63%

of which

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

insurance (excluding PPI): 9%

of which

  • complaints about claims: 52%
  • complaints about sales and advice: 30%
  • complaints about administration: 18%

banking and credit: 24%

of which

  • complaints about charges: 34%
  • complaints about administration: 17%
  • complaints about sales and advice: 12%
  • complaints about transactions: 9%
  • other complaints: 28%

investments and pensions: 4%

of which

  • complaints about sales and advice: 62%
  • complaints about administration: 30%
  • other complaints: 8%

new cases by financial product

new cases by financial product year ended
31 March 2015
year ended
31 March 2014
annual change
PPI 204,943 399,939 down 49%
current accounts
including complaints about:
35,344 19,878 up 78%
- "packaged" accounts 21,348 5,667 up 278%
- direct debits and standing orders 541 534 up 1%
- business banking charges 225 225 n/a
mortgages 12,297 12,606 down 2%
credit cards 8,482 10,472 down 19%
consumer credit
complaints about
9,572 7,630 down 25%
- point-of-sale loans 1,582 1,418 up 12%
- hire purchase 1,784 1,511 up 18%
- payday loans 1,157 794 up 46%
- catalogue shopping 882 792 up 11%
- credit broking 1,213 649 up 87%
- debt collecting 843 557 up 51%
- debt adjusting 508 530 down 4%
- store cards 450 466 down 3%
- hiring, leasing and renting 333 291 up 14%
- home credit 136 138 down 1%
- credit reference agencies 189 131 up 44%
- debt counselling 140 95 up 47%
motor insurance 7,361 7,190 up 2%
unsecured loans 6,255 6,310 down 1%
buildings insurance 4,510 4,095 up 10%
including complaints about
4,290 4,361 down 2%
- personal pension plans 1,618 1,748 down 7%
- small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs) 1,032 1,039 down 1%
- annuities 776 601 up 29%
- SERPS 436 527 down 17%
- free-standing additional voluntary contribution (FSAVC) schemes 142 172 down 17%
- income draw-down 180 169 up 7%
- pension mortgages 94 95 down 1%
other banking services
including complaints about:
3,754 3,517 down 7%
- debit / cash cards 1,043 1,177 down 11%
- money transfer 1,323 952 up 39%
- cheque clearing 563 569 down 1%
- electronic payment 491 435 up 13%
- safe custody 81 105 down 23%
- foreign currency 74 94 down 21%
investment-linked products
including complaints about:
3,128 3,104 up 1%
- investment ISAs 1,006 929 up 8%
- unit-linked bonds 560 791 down 29%
- guaranteed-income bonds 555 419 up 32%
- "with-profits" bonds 260 304 down 14%
- film partnerships 174 201 down 13%
- unit trusts 93 109 down 15%
- PEPs 63 55 up 15%
- "structured" products 37 52 down 29%
savings accounts 2,989 3,611 down 17%
term assurance 2,644 3,426 down 23%
mortgage endowments 2,573 3,573 down 28%
travel insurance 2,318 2,271 up 2%
whole-of-life policies and savings endowments 2,107 2,479 down 15%
contents insurance 1,436 1,771 down 19%
card protection insurance 1,401 1,118 up 25%
home emergency cover 1,298 1,387 down 6%
portfolio management 1,236 1,166 up 6%
commercial vehicles and property 1,159 1,301 down 11%
secured loans 1,070 1,053 up 2%
stockbroking 807 913 down 12%
critical illness insurance 791 906 down 13%
pet and livestock insurance 790 720 up 10%
private medical insurance 786 988 down 20%
extended warranty insurance 777 755 up 3%
roadside assistance 733 668 up 10%
legal expenses insurance 702 707 down 1%
including complaints about:
582 342 up 70%
- interest-rate hedging products 287 135 up 113%
- spread betting 98 126 down 22%
mobile phone insurance 536 551 down 3%
personal accident insurance 422 477 down 12%
specialist insurance (including marine and event) 404 457 down 12%
building warranty 299 384 down 22%
business protection 253 274 down 8%
guaranteed asset protection ("gap" insurance) 206 247 down 17%
caravan insurance 98 81 up 21%
total number of new cases 329,509 512,167 down 36%

what the complaints were about: insurance

Including complaints about payment protection insurance (PPI), insurance accounted for 72% of all the new complaints we received during the year (compared with 84% last year).

87% of all these insurance complaints were about PPI - with other insurance products making up the remaining 13%. A slight change to last year which is reflected in the decrease in PPI complaints we received.

The charts below show how these complaints were spread across the different types of insurance.

type of complaint %
PPI 87
all other insurance-related complaints 13
type of complaint %
motor insurance 24.5
buildings insurance 15
term assurance 9
travel insurance 7.5
contents insurance 5
card protection 4.5
home-emergency cover 4
commercial vehicle and property insurance 4
income protection 4
critical illness insurance 2.5
private medical insurance 2.5
extended warranty insurance 2.5
pet and livestock insurance 2.5
roadside assistance 2.5
legal expenses insurance 2
mobile phone insurance 2
personal accident insurance 1.5
guaranteed asset protection ("gap" insurance) 1
other (including business protection, building warranty and caravan insurance) 3.5

complaints about payment protection insurance (PPI)

year ended 31 March number of complaints
2015 204,943
2014 399,939
2013 378,699
2012 157,716
2011 104,597

Since 2011 the majority of complaints referred to us each year have involved payment protection insurance (PPI). In total, we have now received more than one and a quarter million complaints about PPI. In 2014/2015, we received 204,943 new PPI complaints - compared with 399,939 last year.

As we explained in our plans for the year ahead - published at the start of the financial year in March 2015 - volumes of PPI complaints haven’t fallen as fast as we or our stakeholders originally expected. Over the year, we received an average of 4,000 PPI complaints each week. While this is only a quarter of the number we were receiving at the peak of mis-selling concerns, it is still twice as many complaints as all other areas put together.

We have always been clear that dealing with the fall-out from PPI mis-selling is a significant and unprecedented challenge for us - and one that we will be putting right for several more years. In 2014/2015 - adding to the 2,000 adjudicators who joined us over the last two years - we recruited a further 200 case handlers to help PPI customers.

As we have highlighted in ombudsman news this year, the nature of the PPI cases we are dealing with has changed. Compared to the complaints we initially received - which generally involved similar issues about the way policies were sold by larger businesses - we are now sorting out far more complex and entrenched complaints.

For example, we are seeing many complaints involving smaller businesses, who sold PPI alongside their main line of work. The PPI policies involved can vary considerably - and so establishing whether they were suitable isn’t always so clear-cut. And many cases involve PPI sold with mortgages, which we are generally less likely to agree was mis-sold.

These changes mean that it isn’t enough for us simply to recruit increasingly more case handlers. This year we have continued to invest in the knowledge and skills of our existing staff - and in the way we share knowledge and experience internally. This will help ensure that our case handlers have the expertise needed to sort out the most challenging, hardest-fought PPI complaints - in a way that both sides feel is fair.

During the year we received more complaints involving so-called “comparative” or “alternative” redress. The consumers involved had been offered the difference between the money they paid for an unsuitable PPI policy - and the money they would have paid for a different PPI policy that the business thinks is more appropriate.

When a business offers “alternative” redress, we check that they have carefully considered their customer’s individual circumstances. In some cases, we agree that the offer is fair. However, because the compensation involved tends to be lower, customers are often disappointed - especially if the business hasn’t clearly explained what they have done.

As well as helping consumers understand the position, our specialist team - focused on compensation and redress - supports businesses, particularly smaller businesses, who are unsure about our approach.

…we have continued to invest in the knowledge and skills of our existing staff - and in the way we share knowledge and experience internally.

Many PPI complaints were again brought to us by claims managers this year. Although we continue to emphasise how easy it is to use us directly, we recognise that some people only realised that they might have a problem with PPI after being contacted by a claims manager - and so follow that route to us.

Unfortunately - even after many years of handling PPI complaints - some claims managers still send us “generic” information that isn’t specific to each individual customer. We continue to explain the difficulties this can cause us in deciding a fair answer in the customer’s particular circumstances. And we work closely with the Claims Management Regulator - part of the Ministry of Justice - sharing the good and bad practice we see. Our insight helped to inform the regulator’s new rules - which have been in place since October 2014.

Since January 2015, people who are unhappy with the service they’ve received from a claims-management company can refer a complaint to the Legal Ombudsman.

…some claims managers still send us "generic" information that isn't specific to each individual customer

Although we’ve resolved 328,915 PPI complaints this year, we know that around 250,000 people are still waiting for our answer. To make sure our customers are clear about what to expect, during the year we:

  • Continued to update people on their PPI complaints - through a part of our website called “your PPI case with us: what's happening?” and with a regular e-newsletter.
  • Invited people who had been waiting more than a year for an answer to visit us - so they could ask us their questions face to face, and see at first hand the efforts we’re making to sort things out fairly and quickly.
  • Explained our approach to PPI at tailored seminars for smaller businesses and claims managers - to help them understand the decisions we have already made, and resolve new complaints themselves without our direct involvement.

complaints motor insurance

year ended 31 March number of complaints
2015 7,361
2014 7,190
2013 7,785
2012 7,264
2011 5,784

Like last year, complaints about car and motorcycle insurance accounted for the majority of insurance complaints excluding PPI. Disappointingly, many of the people who contact us are simply unhappy about the level of customer service they have received from their insurer.

In particular, we found poor communication to be at the root of many complaints. For example, we heard from a number of people whose motor insurance policies had been cancelled without any notice or explanation.

In some of these cases, we found that the insurer had sent a letter telling their customer that they “didn’t need to do anything” to renew their policy. But in fact, the insurer had expected the customer to review important details - and went on to cancel the policy after later finding out that these details had changed during the year.

…understandably, the longer the uncertainty continued, the more upset and frustrated the customer became

These types of communication break-downs can have very serious consequences. Some people told us they had only discovered that their motor insurance policy had been cancelled after being pulled over by the police for driving without insurance.
In the complaints we received about vehicle repairs, customers often felt they had waited an unnecessarily long time - and that their insurer hadn’t kept them up to date. We also heard from people who hadn’t received the courtesy vehicle they were entitled to under their policy.

Rather than having an open conversation about these concerns, some insurers seemed to have ignored them or blamed another party - causing upset and frustration. Understandably, the longer the uncertainty continued, the more upset and frustrated the customer became.

We highlighted these problems at a forum we held for motor insurance over the summer -emphasising that better communication is in the interests both of businesses and their customers.

And encouragingly, we did see some examples of very good communication this year. For example, we saw cases where, despite wanting to challenge a valuation, the customer couldn’t fault the way the insurer had communicated with them.

complaints about buildings and contents insurance

year ended 31 March buildings insurance complaints
2015 4,510
2014 4,095
2013 4,611
2012 4,556
2011 3,469
year ended 31 March contents insurance complaints
2015 1,436
2014 1,771
2013 2,027
2012 2,089
2011 1,697

This year the Financial Conduct Authority (FCA) carried out a “thematic review” of insurance claims, including household insurance. This highlighted the problems that can arise when other parties - like loss adjusters and contractors - are involved in claims.

These problems are reflected in many of the cases we see involving household insurance. We hear from people who are frustrated at the amount of time and stress that seems to be involved in coordinating and chasing up work carried out by a range of third parties acting on insurers’ behalf. Insurers have told us this is an area they know they need to improve on.

The number of complaints following floods or other “escapes of water” remained similar to last year. In some cases, the customers involved were as upset about the way their claim had been dealt with as they were about the incident itself.

Despite recent improvements to drying technology - the most common way these claims are put right - we still receive many complaints about failed drying attempts or poor standards of work. We continue to emphasise to insurers that complaints are unlikely to arise if the job is done properly first time.

We again received complaints about the cost of household insurance. These complaints are often triggered when a customer receives a renewal quote from their current insurer. As a number of media articles have highlighted over the year, these quotes can be far higher than those a different insurer is offering - or higher than those the same insurer is offering to new customers.

People are often frustrated that we can’t change the prices that businesses generally charge - because we weren’t set up to intervene in these wider “commercial” decisions. But we can look into whether the insurer has applied their pricing policy fairly and consistently in each case. This usually involves asking them to explain the reasons why that individual customer’s premium has increased.

…we continue to emphasise to insurers that complaints are unlikely to arise if the job is done properly first time.

We don’t uphold many complaints about pricing. But we generally do if there is evidence that the customer has been misled in some way - for example, if the insurer implied that their renewal quote was competitive when it clearly wasn’t.

complaints about travel insurance

year ended 31 March number of complaints
2015 2,318
2014 2,271
2013 2,742
2012 2,431
2011 2,536

Following a slight fall last year, we received more complaints about travel insurance in 2014/2015. Many of the people we heard from told us they didn’t know about the exclusion that had been used to reject their claim - and that the consequences of the claim not being paid had been very stressful and upsetting.

We recognise that the “small print” of insurance policies can easily be overlooked. While consumers have a responsibility to take out the right level of cover, insurers have a responsibility to make important information clear.

So when we look into a complaint, we consider carefully how the consumer was made aware of the exclusion in question - and whether it was fairly applied in the particular circumstances. In ombudsman news in December 2014, we gave examples of this approach in practice - looking in particular at winter sports cover.

We also continued to see problems involving alcohol exclusions in travel insurance policies. As we pointed out in ombudsman news in September 2014, we don’t think it’s reasonable for insurers to expect customers not to drink at all when they’re on holiday.

…we recognise that the "small print" of insurance policies can easily be overlooked.

But we recognise that when insurers are considering a claim, it can be difficult to establish the full picture of what happened - especially if they’re relying on reports from overseas hospitals, or only the customer’s recollections.

So we encourage insurers to look for wider information - including third party accounts and records from the customer’s usual GP, who may be able to provide significant medical evidence.

Medical problems - “pre-existing” conditions in particular - continued to feature this year in the travel insurance complaints we received. In many cases, the policyholder had cancelled a holiday when relatives they had planned to travel with fell ill. But they apparently hadn’t realised - until their claim was turned down - that their travel insurance didn’t cover this situation.

We saw an increase this year in complaints about emergency medical treatment abroad. People often tell us they’re unhappy with the amount of time it took their insurer to “guarantee” payment for their treatment - even when there was no dispute that it was covered by the policy. This meant the customer had to pay their own fees upfront - with money they otherwise would have had available to spend over the rest of the holiday.

We were particularly disappointed at the response of some insurers when their customers needed to be brought home. Given the stressful and often painful nature of these situations, it’s very important that insurers meet their responsibilities - rather than, as we found in some cases, leaving their customer or even a holiday rep to sort things out.

As with motor insurance, we continue to explain to travel insurers how good communication can make all the difference to their customers.

complaints about health and medical insurance

year ended 31 March number of complaints
2015 2,733
2104 3,333
2013 3,800
2012 2,295
2011 1,754

We continue to hear from people who are concerned that they have been mis-sold income protection policies. As we have mentioned before, we think that some of these people are confused about the type of cover they have - and believe they have an unwanted payment protection policy (PPI), rather than income protection, which might be better suited to their individual circumstances.

But in some cases this year - like previous years - we did decide that people had been mis-sold income protection policies. This was usually because the policy duplicated cover that the consumer already had - or because the consumer wasn’t made aware of what exactly the policy covered.

We also heard from people who had made a claim - only to find that the cover had changed since they first took out their policy, and their medical condition was no longer covered. These complaints often involved private medical insurance policies, where cover for different medical conditions can change from year to year.

In some cases, the insurer had applied an exclusion after a policy was taken out - having decided that their customer’s medical condition had now become “chronic” (long-term), so they no longer wanted to cover it.
In general, it is for insurers to decide the risks they want to insure. But occasionally, we find that an insurer can’t justify their decision. This is usually because they don’t have any evidence that their customer’s condition has actually changed or that it should be excluded from cover. Understandably, these complaints can be very distressing - so whatever the outcome, we will check that the insurer communicated openly and sensitively with their customer.

This year we have seen an increasing number of complaints about annual price increases in private medical policy premiums. Some people tell us that they were given a long-term “price promise” when they first took out their medical insurance policy - which the insurer hasn’t honoured.

People also contact us about their personal accident policies - confused that their insurer is withdrawing cover, when they had understood that cover was guaranteed until a certain age.

Although it’s not our role to tell insurers to change their approach to pricing in general, we always look carefully at how they have applied their “commercial judgement” in a particular customer’s case. This involves looking at what information the customer was given about the policy - and establishing whether or not this was misleading.

Claims involving mental health conditions still make up a significant part of the medical insurance complaints that reach us. Some of these cases involve policies that offer short-term income-replacement - typically up to 12 months - if someone can’t work because of illness and injury. These policies sometimes have a clause to say that if the consumer has a mental health condition - including stress, anxiety and depression - then the benefit is only payable if they’re under the care of a psychiatrist.

… so whatever the outcome, we will check that the insurer communicated openly and sensitively with their customer

In fact, in the cases we see, we find that very few people with these sorts of conditions are under the care of a psychiatrist. And the National Institute for Health and Care Excellence (NICE) says that most patients’ treatment can be managed by their own GP. We take the view that if an insurer has set such a strict requirement - making it likely that claims involving all but the most severe mental health conditions will be rejected - then they need to make this very clear when consumers are taking out the policy.

During the year we updated our online technical resource on our website, setting out our approach to complaints about private medical insurance and critical illness cover. We hope this will help insurers understand how to reach decisions that feel fair in what are often very difficult situations.

what the complaints were about: banking and credit

During the year, 24% of the complaints we received involved banking and credit - up from 13% last year.

This table shows what these complaints were about.

type of complaint %
current accounts 44
mortgages 15
credit cards 10.5
consumer-credit products and services (eg point-of-sale loans, hire purchase and catalogue shopping) 12
unsecured loans 8
savings accounts 4
secured loans 1.5
other banking services 5

complaints about current account

year ended 31 March number of complaints
2015 35,344
2014 19,878
2013 19,560
2012 14,595
2011 19,944

If someone is experiencing financial difficulty - and explains this to a business they have an account with - the account provider is required to respond positively and sympathetically. Like last year, many of the complaints we received about current accounts came from people who felt that this hadn’t happened.

If a business is owed money (or soon will be - for example, if someone is about to go overdrawn), there are several practical ways that they could help their customer. For example - depending on the individual circumstances - they could reduce or stop applying interest and charges, agree a payment break or repayment plan, or put in place a combination of these things.

It’s important these kinds of steps are taken as soon as a business knows about their customer’s difficulties - rather than letting the problem escalate. Yet again, we have had to explain to businesses that their responsibilities begin once they know their customer is struggling - rather than only once the account is “in default”.

When someone tells us they feel they’ve been treated unfairly, we sometimes find that they have more than one account with the same provider - for example, an overdraft, a loan and a credit card. In these cases, we check that the business has considered their customer’s overall position when suggesting a solution to the problem.

To resolve complaints involving financial difficulties, we rely on both sides communicating honestly and constructively with us and with each other - so we can try to mediate a positive way forward. We weren’t set up to give money advice. Instead, we work closely with debt charities and other specialist agencies to make sure people get the wider support they need.

We continued to receive complaints about “packaged” bank accounts this year - with 21,348 cases referred to us. These accounts generally operate like normal bank accounts - but for a regular fee, they also offer benefits like mobile phone insurance, breakdown cover or better interest rates on borrowing.

Around three quarters of the packaged account complaints we investigate reach us through claim managers - and we receive fewer enquiries direct from customers themselves. We uphold under half of these cases, which is less than our overall uphold rate.

… to resolve complaints involving financial difficulties, we rely on both sides communicating honestly and constructively

It often isn’t immediately clear whether these accounts represented good value - or whether someone is any worse off for paying the fee. A particular package may have represented a fair deal in many cases - but could have been unsuitable for some people because of their particular circumstances. While someone may have been able to use only some of the benefits, the package might have been useful to them overall.

To prevent complaints being escalated to us unnecessarily, we’re working closely both with claims managers and businesses - to help them identify which consumers have and haven’t lost out. And we’ve been encouraged by signs that this is happening - based on the cases that are being referred to us.

As in previous years, we continued to receive a substantial number of complaints involving disputed transactions - where people told us they weren’t responsible for a payment made from their account. Once again, in some cases we found people reluctant to give us much detail - generally where the transaction happened during a visit to a bar or on a night out.

Different rules apply to debit cards and credit cards - and depending on the way the card was used. Although some current account providers are getting information to us faster, others are still confused about which rules are relevant - and how these rules apply in individual cases.

Over the year we continued to receive complaints involving fraud and scams. Like last year, many of these involved so-called “vishing” - where someone is tricked into thinking they’re talking to their bank or the police, and passes on their security details or bank card.

In some cases, people lose significant amounts of money through these scams. But if a customer authorises a payment - even under fraudulent circumstances - the business involved has only a limited duty to protect the customer’s money. And even if the third party didn’t have the customer’s authority, businesses still sometimes argue that the customer didn’t take “reasonable care” of their card or security details.

However, if we receive a complaint, we always look into what the business themselves could have done to protect their customer - while bearing in mind that people need to be generally aware of possible fraud and scams.

complaints about mortgages

year ended 31 March number of complaints
2015 12,297
2014 12,606
2013 11,920
2012 9,537
2011 7,067

After a 6% increase in the previous year, complaints about mortgages and second-charge loans dipped slightly, but remained at a high level. We were disappointed to receive, like last year, a number of complaints about administrative errors that could have been put right without the unnecessary inconvenience of being escalated to us.

We also continued to receive complaints where the lender hadn’t identified their customer’s specific concerns - or hadn’t recognised the full, individual impact of what had gone wrong.

The number of complaints about interest-only mortgages continued to increase. Most came from people worried that they wouldn’t be able to repay their mortgage - and questioning the advice they were given.

On the other hand, we heard from fewer people at the end of their interest-only mortgage arrangement who couldn’t repay the capital. We hope this is because lenders are working constructively with customers who find themselves in this position.

We also heard from a number of people who had mortgaged their homes to invest in overseas properties - and felt that they’d been mis-sold interest-only mortgages. The overseas properties in question have generally been bought “off-plan” - but often haven’t materialised.

In last year’s annual review, we reported that we’d received significant numbers of complaints about changes to the interest rates on standard variable-rate mortgages and tracker mortgages. We continued to receive these complaints at a steady flow.

The disputed rate changes in the cases we saw affected both residential and buy-to-let customers. Under the rules that apply to our work, we can look at complaints about the sale of buy-to-let mortgages sold by lenders - but not by intermediaries. Because of new European regulations, some rules in this area will change from 2016 - but it isn’t expected that this will have a significant impact on the cases we see.

Financial difficulties continued to feature in a substantial number of the mortgage complaints we received. We recognise that many people find asking for help very difficult - and that when they do, they don’t always articulate the more complex, deep-rooted issues involved.

We bear this in mind when, for example, someone complains to us about an increase in their mortgage interest rate. After talking things through, we often establish that they’re actually in serious wider financial difficulties - and the interest rate change was a “tipping point”.

The number of cases we saw involving repossessions remained at a similar level to last year - but these are particularly distressing complaints. Unfortunately, we found that many people hadn’t sought help until they received the repossession order.

We can’t reverse the legal process of repossession - and if things reach that point, there are only limited ways we can help. For this reason, it’s important that businesses are alert to early signs that their customers are struggling. And we work closely with free debt advice organisations - like Stepchange and National Debtline - to make sure people are supported where we can’t help.

… it's important that businesses are alert to early signs that their customers are struggling

During the year, we’ve seen a steady number of complaints about “porting” - transferring a mortgage to another property. These complaints are often about the charges that the lender wants to apply for moving from one mortgage product to another.

However, we have also begun to receive complaints from people who have been prevented from porting their mortgage at all. The customers involved often tell us they feel discriminated against - usually because of their age, but sometimes because of their nationality. This could reflect the way some businesses have interpreted new rules on mortgage lending, which have applied since April 2014.

complaints about credit cards

year ended 31 March number of complaints
2015 8,482
2014 10,472
2013 19,634
2012 19,183
2011 17,466

We’re still receiving a significant number of complaints involving section 75 of the Consumer Credit Act 1974. This gives legal protection to people buying goods or services. If the supplier misrepresents the goods and services - or breaches the contract - the credit card provider is equally liable.

The complaints we saw during the year reflected the wide range of things people buy using credit cards - from concert tickets to fitted kitchens.
This year we received a significant number of complaints about timeshares and holiday club memberships - where people felt the contract had been misrepresented to them. Many of these complaints were brought to us by claims managers and relate to events that happened a number of years ago.

… the complaints reflected the range of things people buy using credit cards - from concert tickets to fitted kitchens

Disappointingly, we continue to hear from people whose card provider hadn’t looked into the situation fully - in some cases, not seeming to recognise their legal obligations. This often led to unnecessary delays and inconvenience.

Like last year, the number of complaints about “default charges” on credit cards has fallen. These charges are generally applied when someone misses a payment or pays it too late. We hope this means that businesses have been taking a fairer approach when looking at complaints about charges - and have been considering their customers’ circumstances more fully.

However, the number of complaints about disputed credit card transactions has continued to rise. As we mentioned earlier in this chapter, some card providers seem unsure of their obligations. Not only are there different rules for credit cards and debit cards, but different rules again apply where a credit card account is used, but not the card itself. So this year we continued to help card providers improve their understanding of these distinctions.

complaints about consumer credit

year ended 31 March number of complaints
2015 9,572
2014 7,630
2013 8,470
2012 7,416
2011 7,250

We have been able to look into complaints about a wide range of consumer credit products for a number of years. But this has been the first full year in which the FCA has regulated the consumer credit market - since it took over responsibility from the Office of Fair Trading in April 2014.

During the year we received 46% more complaints involving payday lending than in 2013/2014 - following a similar 46% rise in the previous year. Many people we spoke to felt that the short-term loans they had been offered were unaffordable. And in many cases, we found that the lender hadn’t done enough to ensure that the loan in question was appropriate - given that particular customer’s financial position. In some cases, the lender’s credit-scoring process was clearly inadequate.

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

We continued to see complaints about payday lenders’ use of “continuous payment authorities”. Multiple attempts to take payments can lead to extra charges on someone’s account - pushing them further into debt, and sometimes leaving them
without enough money for essentials.
In July 2014 - in recognition of these problems - the regulator put in place limits on lenders’ attempts to take payments, as well as limits on how many times loans can be “rolled over”. And in January 2015, a cap was introduced on late repayment fees and charges, and on the total cost of short-term loans.

During the year we have also seen many payday loan companies move towards more flexible products and extended loan periods. We hope that these developments will result in fewer complaints about continuous payment authorities and affordability.

A particularly high number of people contacted us about payday loan worries over the summer - following our work to highlight particular issues we were concerned about. By sharing our insight, we helped many lenders and their customers reach a pragmatic, tailored solution much more quickly.

We were concerned to receive significant numbers of enquiries about credit broking this year - something we also highlighted publicly over the summer.
When people contacted us, we frequently found that the credit-broking websites they’d used were giving unclear, sometimes misleading information. For example, people weren’t being made aware that the credit broker would only be finding the loan - rather than actually providing it. And the terms and conditions didn’t always make it obvious that a fee would be charged for this service.

In the worst cases, the customer’s bank details had been passed to several other credit-broking companies - who then all took payments from their bank account.

Given the short-term nature of the borrowing concerned - and the speed at which loans are approved and paid into people’s accounts - the “traditional” complaints-handling framework could be seen as lengthy and frustrating. But by taking direct, practical steps, we often found that we were able to step in and put things right quickly.

For example, by using the phone to have upfront conversations, we were able to sort out many problems the same day. We found credit brokers were generally willing to refund unclear fees or charges - or to arrange with banks for unauthorised payments to be refunded - once we’d called to discuss their customer’s situation.

We also engaged with consumers using social media and other digital channels like webchat and SMS texting. We recognise that people increasingly expect to be able to engage with organisations this way. And these less intimidating, informal channels may be particularly suited to these types of complaint - given that many people tell us they’re embarrassed about the trouble they’re having.

… we frequently found that credit-broking websites were giving unclear, sometimes misleading information

We saw a substantial increase in complaints about debt collecting this year. Disappointingly, like last year, we decided in some cases that the debt collector’s behaviour amounted to harassment. And we again saw a number of complaints where the wrong person was being chased for a debt.

The issues involved in complaints about debt management remained largely the same. In most cases, people told us they were unhappy with the information provided by the debt manager about fees and charges.

In particular, we found people hadn’t been made aware that the payments they made would initially only cover the debt manager’s fees - instead of reducing their actual debt. Since the FCA began regulating debt-management businesses in April 2014, some businesses involved in these complaints have now left the market.

complaints about unsecured loans

year ended 31 March number of complaints
2015 6,255
2014 6,310
2013 7,809
2012 6,262
2011 5,820

We continue to receive complaints where borrowers - both individuals and small businesses - are struggling to make loan repayments, and feel their lender isn’t doing enough to help them.

Lenders should always ensure that a loan is affordable for the borrower - but the type of checks they should carry out will depend on the circumstances. Similarly, when a borrower has difficulty making repayments, we’ll check that the lender has tailored the help they offer to individual customer.

Once it’s clear someone is in financial difficulty, discussions about how the loan could be repaid should happen as early as possible. If a lender gives someone the opportunity to be open about their circumstances, they can together consider how to move forward. In the cases we resolved, we found that most lenders were willing to accept regular reduced payments and to agree a repayment plan.

Like last year, complaints about unsecured loans have continued to include problems with “personal guarantees”. The people getting in touch with us are often those who have guaranteed the loan of a family member. Where we found things had gone wrong, it was usually because the lender hadn’t made sure that the guarantor understood what they were agreeing to.

... the people getting in touch with us are often those who have guaranteed the loan of a family member

If someone acted as guarantor for borrowing taken out by their own small business, the loan could have been covered by the Enterprise Finance Guarantee scheme. This year, we once again found that many lenders hadn’t clearly explained to guarantors how the arrangement works.

Given the ongoing public focus on interest-rate hedging products sold to smaller businesses, we saw an increase in these complaints this year. As well as cases where hedging products had been sold alongside loans, we also saw cases where they had been “embedded” within a loan.

Small businesses who were sold hedging products tell us they feel that these were unsuitable - and that the bank didn’t made them aware of the potentially very high costs of ending the arrangement early.

In many of these cases, we find that the bank failed to give enough information. In others, we decide that with better information the small business wouldn’t have taken out a hedging product at all, would have taken out a different one, or would have taken out one on a shorter-term basis.

complaints about savings accounts

year ended 31 March number of complaints
2015 2,989
2014 3,611
2013 4,967
2012 4,286
2011 4,783

Interest rates on savings accounts have remained at a historic low this year. Because of this, many providers continued to offer accounts with promotional interest rates that fall after an initial period. Disappointed with the returns on their savings, some people complained that they should have been notified when the interest rate changed.

Businesses are expected to give their customers notice when a promotional or introductory interest rate is coming to an end - so we’ll always check whether this happened. The relevant rules also say that businesses must notify customers personally about any change in interest rates if the change is “material”.

Deciding whether this is the case involves considering both the amount of the rate change and the size of the account. Some account providers who hadn’t done this said that they had acted in line with “industry guidance” - but we said that they should have acted in line with the regulations.

complaints about other banking services

year ended 31 March number of complaints
2015 3,754
2014 3,517
2013 3,838
2012 2,955
2011 2,733

This year we received a significant number of complaints about “e-money” - usually involving pre-paid accounts that consumers had used online.

Most of these problems were caused because of administrative errors. Other complaints related to terms and conditions - for example, terms that had allowed the provider to freeze the consumer’s e-money account.

Consumers also complained to us that they’d withdrawn money overseas from their pre-paid account - and that their account provider hadn’t told them that a fee would apply. Other consumers were unhappy that the exchange rate they’d been given when they withdrew currency overseas wasn’t as good as the rate that had applied when the money was loaded into their account.

Many of the consumers who complained about these issues had thought their account offered them the same protection as a bank account or a credit card. But this isn’t the case. Many protective features don’t apply to these accounts - and different e-money providers have different terms and conditions.

Like last year, we continued to see complaints about the “faster payments service”. Most of these were from people who had incorrectly entered the intended recipient’s account details. When payments are made online, only the sort code and account number are used. So if someone accidently enters the wrong account number - and there is an account with that number at the same branch - then the money will go into the wrong person’s account.

People aren’t always sure which bank they should complain to in these circumstances. But as long as someone is a “payment service user” they can complain about both their bank and the recipient’s. If one of the banks involved is outside the UK, we’ll look at how far the UK-based bank tried to put things right.

… different e-money providers have different terms and conditions.

The downside of nearly-instant payments is that money can “disappear” very quickly - and there’s a limit to what can be done to put things right. In May 2014 the UK Payments Council launched a new voluntary code of practice - which sets out what customers can expect from the businesses involved if a payment goes missing. Most banks and building societies have signed up to this code - and along with existing rules and good practice, we will take it into account when we decide complaints.

This year - as in previous years - we received a number of complaints involving powers of attorney. Losing mental capacity - or seeing someone else lose the ability to manage their affairs - can be extremely distressing. Recognising this, we are working closely with businesses, the regulator and other relevant organisations - like Age UK and the Office of the Public Guardian - to help prevent problems arising in the first place.

As part of sharing our own insight and experience, we set out our approach to complaints involving powers of attorney on our online technical resource. We highlighted different perspectives on the challenges presented by powers of attorney in March’s ombudsman news in March 2015. And we created concise, practical guidance for front-line bank staff - to improve their confidence in helping customers using powers of attorney.

We receive relatively few complaints involving cheques - reflecting the fact that they are now used increasingly less often. These complaints continue to involve similar issues to previous years - particularly disputes involving alleged fraud.

For example, we saw disputes where cheques had been stolen in the post - and then paid into new accounts that had been set up using fake documents. In these cases, we often find that overseas identification documents have been used - which UK bank staff might not be familiar with, leading them to overlook discrepancies and warning signs.

We also heard from people who had received counterfeit cheques after selling items through online or newspaper adverts. Some people had deposited cheques into their bank accounts - only for the money to be withdrawn later without their knowledge or consent. These situations can be complex - and to sort them out, we may need information about the accounts of any third parties that seem to be involved.

what the complaints were about: investments and pensions

Over the past year, we received 14,723 complaints involving investments and pensions. This represented 4% of the total number of new cases we received during the year - a similar proportion to the previous year.

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

type of complaint %
mortgage endowments 17.5
whole-of-life policies and savings endowments 14
personal pension plans 11
portfolio management 8
small self-administered schemes (SSASs) and self-invested personal pensions (SIPPs) 7
investment ISAs 7
stockbroking 5.5
unit-linked bonds 4
annuities 5
guaranteed-income bonds 4
(including interest-rate hedging products and spread betting)
"with-profits" bonds 2
other (including unit trusts, "structured" investments and income drawdown) 8
complaints about mortgage endowments %
2015 2,573
2014 3,573
2013 4,657
2012 3,267
2011 3,048

After falling last year, the number of complaints we received about mortgage endowments continued to drop. Despite making up only 1% of our caseload - down from 63% in 2005 - these are still the investment products that we receive the most complaints about.

The peak of complaints about mortgage endowments - now ten years ago - followed major publicity campaigns to make people aware the policies that they’d taken out (mostly in the late 1980s) might not perform well enough to pay off their mortgage. People who took action - and whose policies had been mis-sold to them - received compensation.

The regulator set time limits for making a complaint. For most people who didn’t act in the 2000s, it’s now too late to complain about the sale of their policy. We can still get involved in some cases where there’s no evidence that the customer was notified of the time limits, or if the delay in making a complaint was due to exceptional circumstances. An example of exceptional circumstances is where the consumer was very seriously ill at the time and unable to complain.

We also generally can’t help people who have already complained about the original
sale of their endowment policy - and who now want to complain about the performance of the underlying investment.

complaints about whole-of-life and term assurance

Over the year complaints about whole-of-life policies continued to decrease. We have again been working with claims managers to help them identify complaints that we’re very unlikely to uphold - and to think pragmatically about whether to take them further.

A number of years after someone takes out a whole-of-life policy, usually the business involved reviews their original assumptions. If any assumptions haven’t been met - particularly investment returns - then the business may reduce that customer’s cover, or tell them the premiums need to increase.

… over the year we saw less confusion between whole of life policies, term assurance and PPI

Many people who contact us about whole-of-life policies are unhappy with the outcome of these reviews. If we find someone wasn’t adequately warned that a review could result in these sorts of changes, we’re likely to uphold the complaint.

Over the year we saw less confusion between whole-of-life policies, term assurance and PPI - confusion which caused a number of complaints to be referred to us in previous years. The types of issues involved in these cases are often similar to those involved in PPI complaints - for example, that someone was pressured into buying a policy, or that it wasn’t appropriate in the circumstances.

complaints about pensions

year ended 31 March number of complaints
2015 4,290
2014 4,361
2013 4,401
2012 3,454
2011 2,706

We received slightly fewer complaints about pensions this year - 4,290 cases compared with 4,361 in the previous year. Once again, the majority of these resulted from administrative problems and delays. A number of complaints involved significantly more than £150,000 - the maximum amount we can tell a business to pay a customer.

But that’s not to say that pension complaints involving much smaller amounts of money are less worrying for the people involved. Most people rely on their pension to meet their needs when they retire - so it’s understandable that these are among the hardest-fought disputes we see.

Despite receiving fewer complaints about pensions overall, we received 29% more complaints about annuities. Annuities - a retirement income people buy with their pension pot - received a large amount of publicity during the year, mostly around the changes from April 2015 that mean people no longer have to buy them.

Many people we heard from were unhappy about being offered a much smaller annuity than they’d expected. In December 2014, following a review of the annuities market, the FCA found that many consumers could have been receiving a higher income given their particular circumstances. The FCA also highlighted - as we have mentioned in previous years- that people often buy annuities from their original provider without first shopping around for better deals.

Decisions people make at retirement age have an impact for the rest of their life - and can also have consequences for their family after they die. When someone tells us that they were wrongly advised, we check that they were given clear information - so they were aware of and fully understood all the available options.

During the year we saw a significant rise in the number of complaints from people who had taken out self-invested personal pensions (SIPPs). Three quarters of these complaints involved advice to invest in an “unregulated collective investment scheme” (UCIS) within a SIPP. The selling of UCIS is now restricted to all but a very few types of investor.

… when someone tells us that they were wrongly advised, we check that they were given clear information

On the face of it, SIPPs can offer the prospect of better returns than more “conventional” investments. But the consequences can be extremely serious when things go wrong. In July 2014, the regulator asked SIPP providers to review how they were assessing investments - after finding failings in this area. We find in consumers’ favour in a relatively high proportion of the complaints we receive.

A number of people contacted us about “trail commission” - the fee paid to a financial adviser for advice, including pensions advice, over a number of years. Advisers haven’t been able to charge trail commission for new investments since 2013. If someone raises concerns about the fees they have paid, we consider carefully whether the business is (or was) providing ongoing advice.

complaints about investment-linked products

year ended 31 March number of complaints
2015 3,128
2014 3,104
2013 4,697
2012 3,308
2011 3,784
2010 6,329

year ended 31 March

As we reported last year, we find that the performance of the investment market is generally reflected in the cases we see - with better market conditions resulting in fewer complaints to businesses, and fewer referrals to us. Having fallen by a third in 2014, the number of complaints we received about “conventional” investments increased slightly this year.

However, some types of investment haven’t done so well compared with the market in general - particularly, “unregulated collective investment schemes” (UCIS).

The potentially very serious consequences of investing in exotic, overseas funds have attracted mainstream media attention this year. Shortly before we published last year’s annual review, the FCA restricted the sale of UCIS to all but the most sophisticated and high networth investors. The FCA has since indicated that some complex investments continued to be sold inappropriately.

These circumstances could explain why, despite an overall fall in the number of investment complaints, we continue to receive a significant number of complaints about UCIS and other complex investments. In some of these investment cases, we found that the business’s appointed representative had acted outside their authority. As a result, investors were left unprotected - and in some cases, lost all their money.

Many people told us that they simply didn’t understand the risks involved with investing in UCIS. In some cases, we found that the financial adviser hadn’t highlighted the nature of the investments. In a few instances, the advisers didn’t seem to appreciate that while the investment itself wasn’t regulated, the advice they gave about it was.

Given the very large sums of money involved, it’s understandable that disputes about UCIS and other complex investments are often very hard-fought. Some businesses instruct lawyers to present their case - often overlooking the distinction between the court’s approach and our own approach.

The complex relationships between businesses and their representatives can raise difficult jurisdictional questions for us. In some situations only after substantial and lengthy investigations does it emerge that the nature of the particular arrangement means we’re ultimately unable to help.

… the complex relationships between businesses and their representatives can raise difficult questions

Once again this year, most investment complaints - including those about UCIS - related to the “suitability” of the investments concerned for the individual consumer involved. We also heard from people with so called “structured” investments, “guaranteed” funds and “structured” deposits - who were unhappy not to see any return on their capital after a few years.

We were disappointed to continue to see so many complaints involving basic administrative errors that could have been put right far sooner. Some of these related to stocks-and-shares ISAs, where people had lost out as a result of delays in transferring funds.

In the area of investments, we see a relatively high number of cases involving businesses that have failed - either before or during our involvement. With the investors’ permission, we refer these cases to the Financial Services Compensation Scheme (FSCS).

complaints about stockbroking and portfolio management

year ended 31 March number of complaints
2015 2,043
2014 2,079
2013 2,428
2012 1,842
2011 2,267

year ended 31 March

Over the last year, we again saw fewer complaints about stockbroking and portfolio management - reflecting generally buoyant stock market conditions.

However, we were disappointed that we continued to receive complaints about administrative matters, delays and mistakes in calculations - as well as increases in dealing charges. Our website explains our long-standing approach to these cases - and we encourage businesses to read and apply it.

Last year we reported seeing a marked increase in investment complaints involving film partnerships. We continued to receive a number of these complaints this year - as well as complaints involving carbon trading many of which were brought to us through claims managers.

Many film partnerships were entered into between 2001 and 2007 - and in some cases, we have to explain that it’s too late to complain, given the six-year time limit that generally applies. This can be a particularly complex area legally speaking and there has been court action during the year that has helped to clarify some important legal issues.

… our website explains our long-standing approach to these cases - and we encourage businesses to read and apply it

annual review 2014

annual review 2014/2015

And if you can't quite make it through all 176 pages - you can see all the highlights in this handy 3 minute video.