Barclays and Lloyds named and shamed at top of banking complaints league tableby
The Financial Ombudsman Service has named and shamed guilty financial sector firms for the first time. Will it help them to improve compaints handling?
Customers make more complaints about Barclays Bank than any other individual bank – and it's worth the effort as two-thirds of those complaints are upheld by the Financial Ombudsman Service after the bank rejects them.
Fed-up customers of Barclays lodged 8,283 complaints with the Financial Ombudsman Service (FOS) in the first six months of this year alone. The majority - 5,226 - was about banking and credit services while 2,085 related to insurance cases. More than two-thirds (71%) were upheld in the complainant's favour – 67% of the banking and credit complaints and 93% of the insurance complaints, most of which related to payment-protection insurance policies.
Barclay's shameful track record came to light as the FOS 'named and shamed' guilty financial sector firms for the first time, including banks, insurance companies and investment firms. The data covers a total of 69,841 complaints handled by the FOS in the first half of the year. Of the 100,000 businesses under its remit, 142 accounted for 87% of all complaints.
Following behind Barclays in the complaints stake were Lloyds TSB which was the subject of 6,947 complaints, Bank of Scotland 5,804, Abbey 2,493, NatWest 2,379, MBNA 2,298, HSBC 2,177, Royal Bank of Scotland 1,812, Alliance & Leicester 1,786 and Nationwide Building Society 1,149. Taking into account all of its various brands such as Bank of Scotland, Cheltenham & Gloucester and numerous insurers, the wider Lloyds Banking Group had 15,233 complaints that went to the Ombudsman - 22% of the total.
Consumers who have a complaint must first approach the company providing the service or product, and then go to the FOS if they do not get a satisfactory response. Earlier this month it was reported that customer complaints to banks and building societies have jumped 32% during the credit crunch. But the banks are choosing to ignore this with the number of customer complaints upheld by financial firms themselves dropping from 49 to 40%.
In contrast, the ombudsman service upheld 61% of banking-related complaints, 41% of mortgage complaints, 70% of general insurance complaints and 42% of investment-related complaints in the year to 30 June.
Helping to improve complaints handling
While the banks themselves had cried foul over the publication of a league table of shame, Sir Christopher Kelly, chairman of the FOS, said publication of the detailed information would "help" financial businesses to improve their complaints handling and reduce the number of unresolved disputes referred to the FOS.
"I will now be writing to the chairmen of the financial businesses that generate the largest proportion of our complaints workload, to ask them to consider very carefully both their own complaints performance – as reflected in the data we are publishing today – and the complaints performance of their competitors," he said.
The naming and shaming is one of the last acts of chief ombudsman Walter Merricks, who steps down from the role next month. He was unrepentant about putting the list of bad companies out into the public domain. "I believe that putting this information into the open will now give those worse-performing businesses vital encouragement to improve,” he said, adding that to date the financial firms had done little to put their houses in order. "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.”
But the 'head in the sand' attitude seems likely to continue. A spokesman for the British Bankers Association said most banking customers had no problems. " "Put in context, the proportion of reportable complaints is still very small at 3.5 per thousand products held,” said the spokesman. “Millions of transactions for millions of customers go through the banking system every day and, while it is inevitable that occasionally things go wrong, banks are not complacent and are continually working to improve service and efficiency.”
Some 82% of the complaints the FOS received about Lloyds retail banking arm were upheld, well above rival banks, but a spokesman for Lloyds TSB said the "vast majority" of its 30 million customers were satisfied with its service: "This is reflected in the low number of complaints we receive in relation to the high number of customer accounts we hold.”
Peter Vicary-Smith of consumer group, Which?, commented: “Naming and shaming these companies is a victory for consumers but humiliating for the industry, who have had five years to get their houses in order.”