Customer dissatisfaction with financial firms has reached record levels with half a million new complaints dealt with in the last year, the Financial Ombudsman Service said today.
The Ombudsman, which settles disputes between consumers and financial firms, says businesses are still failing to do enough to clear up complaints themselves, meaning consumers are increasingly turning to the service to step in (see our Financial Rights guide for help with complaining).
In its annual review, the service says it has seen its caseload almost double in the year 2012/13, as it tackled a record 508,881 new cases marking a 92% increase.
Four of the UK's biggest banking groups – Lloyds, Barclays, HSBC and Royal Bank of Scotland (RBS) – accounted for almost two-thirds (62%) of all complaints received by the Ombudsman, increasing on 52% on the previous year.
Over the course of the year, 49% of cases were help up by the Ombudsman in the consumer's favour, including 69% of complaints relating to payment protection insurance (PPI).
Most complained about products
PPI drove the upswing in complaints, making up almost three-quarters (74%) of the cases dealt with by the service. Complaints about PPI more than doubled year-on-year (see our PPI guide for help with reclaiming).
Meanwhile, complaints about current accounts rocketed by over one third (34%), following two years of declines. These complaints often involved people who had hit financial difficulty but felt their current account provider had failed to do enough to help them (see our Best Bank Accounts guide).
Many current account complaints also involved overdraft facilities being suddenly withdrawn and difficulties in cancelling payments, while there was also a "substantial" increase in complaints about paid-for or "packaged" current accounts.
Complaints about mortgages went up by one quarter (25%) over the year, with the majority of these relating to admin errors such as incorrect monthly repayment calculations.
There were also 542 complaints about payday lenders, marking an 83% year-on-year increase. Many complaints about payday firms involved them unexpectedly draining struggling borrowers' accounts of cash.
Natalie Ceeney, chief ombudsman, says: "As levels of confidence in financial services have eroded, it is disappointing that we still haven't seen any significant improvement in complaints handling. Too many financial businesses still seem unable to sort out problems themselves, without the Ombudsman having to get involved."