The shocking scale of consumer mistreatment is uncovered today as the lid is lifted on banks and other financial firms that brush off genuine complaints in the hope they will vanish.

Taxpayer-owned trio Lloyds TSB, Northern Rock and Royal Bank of Scotland (RBS), as well as Barclays, lead the banking hall of shame list.

Independent complaints body the Financial Ombudsman Services upheld the vast majority of complaints against the quartet during the first half of 2009 (see the Financial Fight Back guide).

Anger over missold debt insurance dominates, as this issue represents over 80% of complaints about some firms (see the PPI reclaiming guide for free template letters).

The Ombudsman supports irate customers in almost every insurance-related case against swathes of firms including Lloyds TSB, Egg, MBNA, Capital One, Northern Rock, RBS and Barclays.

The worst offender overall is Lloyds-owned Black Horse as 95% of complaints against the loan company were upheld in that period. Major credit card provider Capital One is another miscreant. The Ombudsman rules against it in almost all insurance and credit-related disputes.

By definition, for a complaint to reach the Ombudsman, it has to have been turned down by the provider initially. Therefore, banks and others are rejecting many complaints where they know they are in the wrong, just to put people off.

Financial services firms typically uphold just 40% of complaints they receive initially, as revealed last week by the Financial Services Authority (see the Banks' rejection spike MSE News story).

Yet the arbitrator now supports consumers in 59% of all cases. This figure jumps to 90% as an average of all PPI claims.

Providers' attitude to complainants has previously been described as "dismal" by the Ombudsman (see the Ombudsman slams banks MSE News story).

Complaints against all regulated firms (banks, lenders, insurers, investment firms and adviser firms) were compiled during the first six months of the year across all product areas (banking, bank charges, mortgages, credit cards, loans, insurance, pensions and investments).

Company totals


Complaints to the Financial Ombudsman by firm (Jan-June '09)
Govt owned? Total complaints Upheld Insurance complaints (i) Upheld
Black Horse Part 1,009 95% 836 99%
Capital One No 1,744 91% 330 98%
Egg No 912 88% 481 99%
Lloyds TSB Part 6,947 81% 3,466 98%
Northern Rock 100% 593 78% 430 98%
RBS Majority 1,812 71% 1,013 94%
Barclays No 8,283 71% 2,085 93%
Abbey No 2,493 67% 236 60%
A&L No 1,786 66% 544 74%
MBNA No 2,298 63% 1,233 99%
Natwest Majority 2,379 60% 582 89%
HSBC No 2,177 60% 621 79%
HBOS Part 5,804 52% 1,227 79%
Nationwide No 1,149 41% 227 63%

Source: Financial Ombudsman Service, (i) Primarily relates to missold payment protection insurance (PPI).

Problem worsening

The percentage of complaints upheld by the Ombudsman has been steadily rising. In the 2008/09 financial year, consumers won in 57% of cases, compared to the current 59%.

Yet just 6% of consumers whose complaint is rejected by their financial provider take their case to the Ombudsman, despite them having a high chance of victory via that route (see the Banks' rejection spike MSE News story).

Broken down into product category, the Ombudsman upholds 61% of banking-related complaints, 41% of mortgage-related gripes, 70% of general insurance complaints and 42% of investment-related grievances.

Martin Lewis, MoneySavingExpert.com creator, speaking on GMTV this morning, said: "These statistics are outrageous, particularly the fact the Government-owned banks are wrongly rejecting people in large numbers.

"It's becoming a consistent tactic to put people off complaining by writing off-putting letters willy nilly regardless of the validity of the case. Why is this happening?

"These companies need to be brought to account. Most people get put off as they trust the big banks when they say you do not have a case.

"It makes no sense unless the banks are deliberately trying to put people off."

Also see the MSE Editorial comment on banks' complaints rejections.

Thousands of new complaints

During the first six months the year, the Ombudsman received 69,841 new complaints – of which 87% related to 142 financial businesses (out of more than 100,000 businesses it covers).

The number of new complaints about each of these individual businesses ranged from Preferred Mortgages with 31 to Barclays with 8,283.

Five banking groups: Lloyds TSB, the Barclays Group, Royal Bank of Scotland, Abbey and HSBC accounted for over half of all new complaints in this period. The Ombudsman stresses, though, that larger providers will naturally attracts more gripes because they have so many customers.

The good guys

While far from perfect, some firms performed much better than others. The Ombudsman only upheld 11% of complaints against Zurich Advice Network and 15% of gripes about Skipton Building Society.

Building societies generally perform much better than banks and loan and credit card firms. For instance, Nationwide lost 41% (out of 1,149) of disputes.

Chief Ombudsman Walter Merricks says: "We have already been providing comparative complaints data on a private basis to the larger financial businesses but this has led to no improvement in the standard of complaints handling by the worse-performing businesses.

"Putting this information into the open will give those worse-performing businesses vital encouragement to improve – which should mean fewer of their customers bring complaints to the Ombudsman that should already have been resolved."

British Bankers' Association executive director Eric Leenders says: "While it is inevitable that occasionally things go wrong, banks are not complacent and are continually working to improve service and efficiency.

"No-one wants to receive complaints but banks will always move speedily to solve any problems their customers have. These numbers published show that customers have no problems with their bank "

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, Bank Charges Hardship, PPI Reclaiming, Credit Card Charges, Direct Debits, Setting Off and Endowment Misselling articles).

Further reading/Key links

Ombudsman guide: Financial Fight Back
Full reclaiming guide inc. free template letters: Bank Charges
Hardship reclaiming guide inc. free templates: Bank Charges Hardship
Reclaim missold debt insurance: PPI Reclaiming