More money sector complaints upheld

Sir Christopher Kelly

The number of complaints being upheld against financial services firms has soared during the past year, figures have shown.

The Financial Ombudsman Service said it found in favour of consumers in 57% of the complaints it investigated in the year to the end of March, well up on the long-term average of between 30% to 40%.

In some product areas the uphold rate was even higher, with the Ombudsman finding in favour of the consumer in 89% of cases involving controversial payment protection insurance and in 75% of credit card disputes.

The Ombudsman blamed the situation on the economic downturn, saying some firms were not investigating claims properly before they were referred to the service because they were watching their bottom line.

It added that survey evidence suggested that many consumers were being put off pursuing complaints against companies because of the unhelpful attitude of the firms involved.

The service received nearly 790,000 enquiries from consumers during the year, leading to a record 127,471 new complaints being lodged.

Within this total, the number of complaints about payment protection insurance tripled to 31,066, following a five-fold increase during the previous year.

Sir Christopher Kelly, chairman of the Financial Ombudsman Service, said: "The financial world is a very different place now from a year ago - and the Ombudsman, like everyone else, has been affected by the economic turmoil.

"For us it has involved dealing with a significant increase in the number of complaints arising from the impact of the worsening financial climate.

"As businesses tighten their belts - and the credit crunch leads to increased financial difficulty for many consumers - we are gearing up to deal with further volatility in complaint volumes."