Posted: 4th November 2013

The Financial Ombudsman Service has published new complaints data for July to September 2013 (Q2). Complaints to the Ombudsman represent the most motivated or aggrieved customers and not the full picture on complaints. However, this source of information is another point of comparison on complaints for firms.

Nod to PPI

No change and no surprise: Payment Protection Insurance (PPI) is still the most complained about product by far. The new figures show that PPI complaints accounted for 81% of all complaints to the FOS in Q2. That said the PPI figures have finally fallen reducing to 115,247 in Q2 compared with 132,152 in Q1. Whilst hardly a success story, it is important to note that the number of complaints upheld in favour of the consumer has also reduced from 78% in Q1 to 61% in Q2.

There is great benefit in looking beyond PPI to view emerging trends in complaints. These trends may or may not show us the PPI of the future. But, if your firm has exposure, quantifying that and acting proactively must be the lesson from PPI. As we know, PPI started as a trickle of complaints before developing into the sea that exists now.

Packaged accounts

A distant second to PPI, complaints about current accounts reached 13.5% of total Q2 complaints. Within current account products, the FOS has for the first time reported separate quarterly figures for packaged accounts. To provide context, a FOS spokesperson confirmed 1,629 packaged accounts complaints were received in the last financial year. This figure has already been exceeded in the first half of the 2013/14 financial year.

Upholds and reasons 

Not just the absolute number, but crucially the uphold rate is high for packaged accounts. 66% of packaged account complaints to the FOS were upheld in favour of the consumer in Q1 rising to 82% in Q2. This is the highest uphold rate of any complaints categories in these FOS figures.

Given the prevalence of packaged account use – one in five adults in the UK has one – firms in this market should be proactive in reviewing packaged accounts, learning the lessons from PPI.

736 new packaged accounts complaints were received in Q1 rising to 1,110 in Q2. Our analysis of published Ombudsman decisions to date highlights trends including: poor record keeping by firms requiring FOS to determine cases on the ‘balance of probabilities’, customers not fully understanding the features of the packaged account, customers not realising they had to pay for it and, more frequently, accounts being up- or downgraded without the consent of the customer.

Whilst the newly published Ombudsman decisions could be more comprehensive, the detail in the decisions is already a rich source of information for facilitating firms’ root cause analysis with immediate practical use for further investigation and senior management challenge.

Mobile phone insurance

According to Ofcom, 92% of adults currently have mobile phones. With the increase in expensive smart phone ownership, mobile phone insurance is emerging as new complaint category to watch.

The absolute numbers are low for the first half of the year at 254 complaints received compared with 615 received in the 2012/13 full financial year. Yet, in Q2, those complaints were upheld in favour of the consumer in 80% of cases compared with 72% in Q1. Is this an emerging trend for firms?

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