Consumers are failing to seek redress when mistreated by banks and other financial firms despite genuine claimants having a high chance of success.

Figures from the Financial Ombudsman Service, the independent arbitrator, show just 5% of those who make an initial complaint to their provider take the matter further, if unsuccessful.

Financial services firms typically uphold just 40% of complaints they receive, yet those rejected who then complain to the Ombudsman have their claim upheld in 53% of cases.

In some instances, such as the misselling of payment protection insurance, consumers win virtually every time, with some payouts totalling thousands of pounds.

The news comes after the City watchdog revealed today that two banks face enforcement action over the poor way they handle customer gripes (see the Banks slammed MSE News story). However, it refuses to name the culprits.

The FSA, which reviewed procedures at six banks which account for 70% of all complaints, says consumers received an unfair decision in one in five cases.

Consumers failing to act

The regulator is concerned too many consumers fail to exercise their rights.

FSA enforcement director Margaret Cole, speaking before today's announcement, said: "I scratch my head sometimes as people don't always seek the redress they are entitled to. People are offered money back and you'd think they would take it.

"I am assuming some people apply the verdict from the bank charges case to everything else and there is a risk people will give up and think there is no point, but this is not the case."

Martin Lewis, MoneySavingExpert.com creator, says: "To be generous here, you could simply say people need to be more bullish about complaining.

"But in my experience, the real problem is that banks use legal language and obfuscation to dissuade people to take complaints further.

"What these stats clearly show is the only way for a consumer to behave is to completely ignore whatever your bank says and always make sure you push onto the Ombudsman."

How to complain

You can take your protest to the Ombudsman if you've had a firm rejection or if you've not had a satisfactory response within eight weeks from your financial provider (see the Financial Fight Back guide).

See the relevant MoneySavingExpert.com guides to get issue-specific complaints tips and free template letters (in the Bank Charges, PPI Reclaiming, Credit Card Charges, Direct Debits, Setting Off and Endowment Misselling articles).

Further reading/Key links

Ombudsman guide: Financial Fight Back
Full Ombudsman complaints data: Complaints table
Full reclaiming guide inc. free template letters: Bank Charges
Reclaim missold debt insurance: PPI Reclaiming