The Financial Ombudsman Service is expecting aboom in complaints overthe next couple of years as more people, strapped for cash, examine their policies to find out whether they have been mis-sold.
More than half of all cases are likely to relate to Payment Protection Insurance (PPI). The Ombudsman is doubling its staff to cope with the demand.
More than 1.27 million people contacted the Ombudsman in its lastfinancial year.
Soaring complaint levels in mortgages (up 35 per cent), buildings insurance (up 31 per cent) and motor cover (up 26 per cent) were part of the picture which was revealed in the Ombudsman's results in the year to 31 March, published this week.
Complaints over contents insurance, debt collection and health and medical cover are also rising fast.
"We're seeing evidence of the tougher economic climate across all areas of our work," said a spokesman.
Natalie Ceeney, chief ombudsman and chief executive, told The Independent about the rising anger of "people who are at the end of their tether and struggling to pay the bills".
This group is more likely to be pursuing smaller sums, such as £50, with a more entrenched approach than in the past.
Some complainants are in dire financial straits with, "the bailiffs at the door", according to Ms Ceeney, with many people checking their products and policies – particularly PPI – to see if they have been mis-sold and whether they could be in line for compensation.
During 2011/12, the Ombudsman's complaints uphold rate, in favour of consumers, rose from 51 to 64 per cent. This largely reflects the poor complaints-handling record of firms in PPI, which currently accounts for 60 per cent of cases.
"We are finding against most firms most of the time," said Ms Ceeney of this sector.
But uphold rates vary vastly by the institution, ranging from 6 per cent to 100 per cent among the larger ones in PPI in late 2011.
Ms Ceeney added: "There are a couple of firms that are getting it right."
People wanting to avoid being mis-sold to and treated badly could do worse than to look first at building societies when choosing products. Ms Ceeney said uphold rates against them were about 21 per cent, compared to about 50 per cent for banks.
While MBNA and parts of Lloyds TSB and Citibank have been losing in more than 90 per cent of cases before the Ombudsman, Nationwide and National Savings and Investments lose only 12 per cent of the time.
The Newcastle, Yorkshire and Skipton building societies all come in well under 20 per cent.
Ms Ceeney herself looks at uphold rates before buying financial products and suggests this is an effective way of weeding out firms which are more prone to poor customer service.
"If I buy an insurance product I'll makes sure that they [the providers] are in the low upholds," she said.
"How they deal with complaints is a very good indication on how they deal with customers."
The recession has coincided with the widespread selling of PPI. Since 16 million of these policies have been sold in the last seven years, and mis-selling is deemed to have occurred in most cases decided by the Ombudsman, it is not surprising consumers are disillusioned with the financial services sector.
"There is a big issue of consumer confidence," said Ms Ceeney. "Increasingly, our role is being the first point of contact where someone has listened.
"The firms are trying very hard to put this [PPI] right," she added, but, even if that is true at board level, a listening approach appears not to have been transmitted to front-line complaints staff in many institutions. As our case studies show, some organisations appear to use complaints-handling rules which are narrower than the complications presented in real life.
Ms Ceeney is worried that the lack of consumer trust is particularly marked among the 25-34 age group. Ombudsman research suggests that this group is put off by using formal systems to complain and even by getting financial advice from traditional sources.
She thinks firms need to start relating to them in a different way.
"They [25-34-year-olds] are taking out their frustration in other ways [than formal complaints]," she said. "Someone with a vengeance complaining on YouTube or on a blog could do far more damage [to a firm's reputation] than by putting in a formal complaint."
There are some areas where complaints levels have gone down – over current accounts, for instance, where there has been a drop of 27 per cent. And there are areas where the complaints volumes are explained by physical circumstances rather than mis-selling – for instance, travel insurance (where the volcanic ash problem in 2010 has pushed up complaint levels in 2011).
About half of complaints coming to the Ombudsman, including 80 per cent of PPI cases, are through claims management companies.
These often take more than 30 per cent of compensation awarded as their fee, and Ms Ceeney warned consumers against using them.
She said the Ombudsman procedures are designed to be simple so that ordinary people can use them without paying for specialist advice.
Gearing up for a difficult time as PPI complaints and others continue to pour in, Ms Ceeney is aware that consumers could sometimes find complaints dealt with slower than they might hope.
But she said: "The message for consumers is: trust that we will get there."
Case study: Back premiums more than car compensation
At one stage in a dispute with her insurer, family support worker Tracey Andrew looked in danger of having to pay more in back premiums to them than she would get in compensation for her written-off car.
Mrs Andrew, from Hull, had an accident in 2010 and thought she was just about to get paid £1,000 or so for her smashed-up old runaround when the insurer asked for the logbook. The insurer then said she had made modifications to the car which she had not notified them about. As a result, they demanded about £1,500 in additional premiums.
"It was ridiculous," she said. Lights, for instance, had been replaced by a previous owner and Mrs Andrew was unaware they were not the original ones. Moreover, in the accident which wrote off the car the lights were not affected and nor did they play a part.
She kept on communicating with the insurer but, she said, "they wouldn't listen at all."
In the end, she took her case to the Ombudsman. They were dealing with a backlog of cases and she thinks it took them about six months to resolve the issue. But "they kept me informed and told me there was a backlog". "They were really good," she said.
The Ombudsman decided "it wasn't reasonable to expect anyone who wasn't an expert to know that [the lights had been changed]". There was a similar issue with a bumper which the Ombudsman also dismissed.
When the Ombudsman made its decision, the insurer still took six weeks to pay out the money.
"My father had car insurance with them," she said. "He rang them up and cancelled it."
Case study: Insurer's refusal to pay out over a stolen vehicle
Ricky Akin, 31, an administration manager from London, lost his car but still had to meet hire purchase payments even though he was without a vehicle.
His insurer refused to pay out because a thief managed to gain possession of Mr Akin's keys.
"Someone got hold of the key and took the car," he said. "I don't know how it happened – if the key dropped out of my pocket or if I was pick-pocketed."
He wrote "10 or 15 letters" to the insurers and made "countless phone calls". "It was so stressful," he said. "Because it was just me, I got nowhere with the case. It was just 'no, no, no' from the insurer."
To make matters worse, the police found the car and kept it until Mr Akin could produce another key. As he had given all the documentation and the spare key to the insurer, he was not in a position to do this.
"It took the insurance company 12-15 weeks to get the keys back out," he said. By this time, police storage fees amounted to £2,000.
When Mr Akin's partner suggested he approach the Ombudsman, he found people who would help him.
The Ombudsman's view was that the insurer could not assume, as it had done, that Mr Akin had been negligent and to blame for the loss of the keys and, therefore, the car. After six months, the insurer finally agreed to pay the total value of the car and the storage fees to Mr Akin.
"The Ombudsman has saved me an absolute fortune and lots of sleepless nights," he said.
Financial Ombudsman Service: www.financial-ombudsman.org.uk, 0800 023 4567 and @Financialombuds
Ombudsman data on uphold rates: http://www.ombudsman-complaints-data.org.uk/
Ombudsman annual review: http://www.financial-ombudsman.org.uk/publications/annual-reviews.htm