Could we learn to love our banks?
For all the complaints received by the Ombudsman, says Neasa MacErlean, an industry may be learning its lesson
Saturday 24 May 2014
The publication of the Financial Ombudsman Service's annual report this week may have signalled the start of a new phase for the complaints-handling body. Not only is it predicting a dip in the PPI (payment protection insurance) complaints that have dominated its caseload in recent years, but it also expects to play a greater role in dealing with gripes and the kind of administrative friction that can ruin a consumer's day but does not quite qualify as a fully fledged complaint.
Later this year the organisation will choose its next chief ombudsman to replace Natalie Ceeney, who stood down in November and who developed much of the thinking behind the body's new direction. She believed that consumers were becoming so much more experienced in complaining that a shift was taking place in the power balance with financial institutions. For his part, the interim chief ombudsman, Tony Boorman, declares himself "genuinely hopeful" that the industry has taken on board the "difficult and expensive mistakes" of widespread mis-selling of PPI and other financial products.
The 2013-14 annual report, published on Tuesday, shows that just under 400,000 new cases of PPI mis-selling were taken on by the Ombudsman over the year, representing 78 per cent of all new cases. But Mr Boorman says the monthly PPI totals for new cases have been falling since last summer – a trend that he expects to continue. "Next year we hope we will see a significant decline," he says, predicting a halving of the number to about 200,000 in 2014-15.
A fall-off in its main source of complaints could mean that the Ombudsman has more time to plan its development rather than firefighting. One way that it might go is to try to use the huge amounts of industry feedback it receives to help the institutions improve the experience of customers, instead of concentrating so much of its might on formal interventions when relationships have broken down. Ms Ceeney laid the basis for this approach when she said: "The notion of a 'complaint' is increasingly outmoded. Most people don't relate to it. Instead, people say: 'I'm annoyed with my bank.' It's about dissatisfaction."
Mr Boorman gives an example of the kind of issue his predecessor could have been describing: "a 90-year- old who is told to upload a copy of their passport" by a bank. While some 90-year-olds would have no problem fulfilling that request if they were opening a new account with a bank, many would struggle – and some might worry so much that it would ruin their day, or even their week. But it would be hard to frame a formal complaint about this requirement – not least because the customer has suffered no monetary loss and also because the bank has a duty to have tight security.
It is in this kind of case that the Ombudsman can intervene usefully. "We can often put the frustration that a customer feels into words a bank understands," says Mr Boorman. "We will write to a bank and simply ask it to look at an issue like this. It's often easy to get an issue resolved this way."
While the experience of widespread mis-selling of PPI has been painful for consumers and banks, both sides have been able to learn from it. PPI and the other huge scandals of bank charges, consumer credit and payday loans have helped educate the public about their rights.
"Historically, complaining was an intellectual, middle- class sport," says Mr Boorman, pointing to stats from five years ago showing that half the complainants to the Ombudsman were in the A and B (upper middle and middle) classes. Nowadays, these account for just a third, with the C1s, C2s, Ds and Es (covering lower middle class down to subsistence level) making up the majority. "That's a really positive sign," he says.
Heading an organisation that received 2.4 million enquiries from consumers in 2013-14, of which 512,000 turned into formal complaint cases, Mr Boorman cannot say the behaviour of banks and other institutions has generally improved.
For instance, there are several areas where complaints have increased to a worrying degree. The number about packaged bank accounts rose 248 per cent in 2013-14 to 5,668. Mortgage complaints rose 6 per cent to 12,606. And the Ombudsman also found in favour of the consumer in 58 per cent of the cases it decided during the year – suggesting that a rather poor approach to complaints lingers on in many institutions. So the acting chief ombudsman limits himself to saying that "the jury is out" on "whether the industry has weaned itself off a retail banking environment which too often relied on misleading customers into taking out premium-priced products they didn't really need".
There is evidence that some institutions and some product areas now have rather better practices. For example, complaints went down on investment-linked products by 34 per cent (to 3,104); on savings accounts by 27 per cent (to 3,611); and on personal pensions by 21 per cent (to 1,748).
It could be argued, perhaps, that the interests of consumers and institutions will need to converge and the industry will find benefits in serving its clients better. This would be because product innovation is potentially dangerous for both sides as neither is familiar enough with the product to know what the flaws are. So the consumer can end up with a poor product and the industry can end up with huge compensation bills – over £22bn so far in the case of PPI.
The obvious way to avoid such nasty surprises is for banks to get better at listening to feedback from customers and to act upon it. "This has got to be a sensible way for business to go," says Mr Boorman. "We all ignore that kind of information at our peril."
Dean Barker, a property manager from Cumbria, was driving his van when he was involved in an accident. A nasty position deteriorated when the policeman who arrived at the scene told Mr Barker that he was uninsured.
Used to getting reminder letters every year, he was unaware his policy had lapsed 14 days previously.
He also had two other insured vehicles at home. He told the officer he would have used one of them if he had known. Mr Barker realised, though, that he could lose his licence. Ultimately the police believed his story but he still had to deal with the financial consequences.
The cover had been arranged via a broker, which said it had sent out a reminder, though it had not chased things up when no renewal was arranged. Mr Barker complained to the broker and, when it held firm, he went to the Ombudsman. "They were very helpful and did not use words I did not understand."
The Ombudsman couldn't get the two sides to agree and later decided in favour of Mr Barker. The van had been written off and so the broker was ordered to give him the pre-accident value.
car insurance broker
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Pension mortgages: 'The advice I was given was wrong and now I face losing my home'
You'll need £220,000 for a minimum wage in your retirement
Questions of Cash: I checked in with Air France in time and still missed the plane
Minister's pension promise to firefighters challenged
Bank-beating exchange rates on your international payments
- 1 Planes go hybrid-electric in important step to greener flight
- 2 North Korean prison officers 'cooked prisoner's baby and fed it to their dogs', more horrific accounts from UN report reveal
- 3 Antonio Martin shooting: Mayor says there should be 'no comparison' to Ferguson
- 4 Antonio Martin shooting: Police and protesters clash over teenager's death just five miles from Ferguson, Missouri
- 5 British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens