Buy-to-let
The Financial Ombudsman Service – the independent service that settles disputes between consumers and financial organisations – answered a record 2.3 million enquiries from consumers in the 2013/14 year.
This equates to 40,000 enquiries a month – and the ombudsman settled a record 518,778 disputes, more than double the number last year.
Payment protection insurance (PPI) made up 78 per cent of all cases, with the number of PPI complaints rising 6 per cent to 399,939.
The number of mortgage complaints also rose 6 per cent to 12,606. Many complaints concern straightforward administrative issues and where the lender hasn’t identified what the problem really is, or hadn’t taken the time to understand the impact of the situation on the customer.
There were a small but steady number of complaints about interest-only mortgages mostly from consumers who were concerned that they’d been given inappropriate advice when they originally took out their mortgage.
A significant number of complaints involved changes to interest rates on standard variable-rate mortgages and tracker mortgages on both residential and buy-to-let loans. Under the “jurisdiction” rules that apply to the ombudsman service it is not able to look at complaints about the sale of buy-to-let mortgages by intermediaries, but it can consider complaints about buy-to-let when they involve lenders.
There continued to be a large number of mortgage-related complaints involving consumers who were experiencing financial difficulty but the ombudsman is increasingly finding that consumers are leaving it to a very late stage before seeking help. Because the ombudsman can’t reverse a repossession, it is limited in what it can do for the consumer – even if the ombudsman agrees the business hasn’t treated them fairly.
In its report the ombudsman said: “This reluctance to admit to being in financial hardship is a trend we’ve noticed across all socio-economic groups. This year, we continued to work with debt organisations – such as Stepchange and National Debtline – to raise consumers’ awareness of how we could help them.”
Tony Boorman, chief ombudsman, commented: “It’s been an unprecedented twelve months for the ombudsman by anyone’s standards. Complaints continued at record levels but our work – and complaints handling in general – is about much more than closing cases and reporting big numbers.
“Each case we see tells a story about the lives and livelihoods of the individuals involved. In our experience, people are simply looking for honest, straightforward answers that show someone has listened and helped make sense of things.”
Almost a quarter of the enquiries received were about general financial problems and concerns – and weren’t product-specific – while one in six people said they’d had a problem with a financial product or service.
Complaints about “packaged” bank accounts increased by more than threefold, while complaints about credit cards went down by 47 per cent. Investments and insurance complaints remained at broadly similar levels to the last two years.
More than six out of 10 (63 per cent) of the total number of cases the ombudsman dealt with related to four banking groups – while 4,504 financial businesses accounted for just 3 per cent of its caseload.
More than three quarters (77 per cent) of people surveyed said they were aware of the Financial Ombudsman Service, and 70 per cent said they trusted the organisation.
