Banks ignoring massive rise in customer service complaintsby
Customer complaints to banks have jumped over 30%. So where are they going wrong? And more importantly, what are they doing to address the problem?
There's a credit crunch out there, people are enormously worried about the viability of financial services institutions and bankers are second only to MPs in the most unpopular people in the UK stakes. Yet banking customer service has gotten no better.
According to the Financial Services Authority, customer complaints to banks and building societies have jumped 32% during the credit crunch. More than a million people complained to the institutions in the second half of 2008, up from 760,000 in the first half of 2006. Some 38% of these complaints have been upheld to date, while 60% of cases were upheld in favour of the consumer in the year to March 31, 2009, compared with a historical average of 30-40%.
Complaints about poor customer service in all financial firms increased by 28%, to 239,500, and a fifth of all the complaints related to 'overcharging'. Customers made 3 million complaints about overcharging, poor customer service and administrative errors to banks and building societies last year. Two out of every three complaints made is about banks, with more than one million alone made in the last six months of 2008.
Complaints from cash ISA customers more than quadrupled to almost 40,000 last year from 8,700 in 2006. Credit card complaints more than doubled, from 73,500 to 151,000, a reflection of the sharp credit card interest-rate rises last year. There were also complaints about the rejection of requests for Section 75 refunds, whereby the credit card firm is liable for consumer refunds if a company goes bust.
Name and shame
Consumer rights group Which has called on the FSA to 'name and shame' the guilty. “It’s a poor reflection on the industry that there are so many unhappy customers out there. Financial firms simply aren’t treating consumers well enough and things must change if the industry is to rebuild its reputation,” said Which's personal finance campaigner Phil Jones.
But there are signs that the banks and insurance firms are actually digging in their heels and rejecting more of their customers complaints out of hand, forcing the customer to go through the elongated process of filing a complaint with the Financial Ombudsman.
The number of customer complaints upheld by financial firms themselves dropped from 49 to 40% with only building societies finding in favour of their customers more than half of the time. A spokesman for the Ombudsman Service said: “We have seen signs that firms are getting tougher with consumers, possibly because of the financial pressures they are under. They are digging in their heels and are a lot less prepared to settle by giving consumers a goodwill gesture. Instead they are standing their ground.”
Later this month, the Ombudsman will publish company-specific complaint figures for the first time. The FSA is also consulting on a similar exercise, which it hopes to implement in October next year. Both actions have been decried by the banking industry which argues that companies with the biggest customer bases will attract the most complaints.
A spokeswoman for the Association of British Insurers, said: "The current format to be used for publishing company-specific data will not help consumers because it doesn't allow them to compare the performance of different companies for specific products, such as motor or home insurance, on a like-for-like basis.”
For their part, the banks seem unrepentant. A spokesman for the British Bankers' Association insisted: 'The vast majority of bank customers have no problems with their accounts and the services they use.”