He received 18,667 telephone calls, approximately the same as in 1994, and 6,723 written complaints, down 16 per cent on the previous year.
The number of complaints that went for investigation also dropped to 717, and of 833 actually investigated during the year, he awarded damages against the banks in 44 per cent of the cases. The smallest award was pounds 10 and the largest pounds 70,000.
Complaints connected with mortgage lending replaced complaints about cash machines as the main concern. The ombudsman condemned banks for overselling loan protection policies intended to help borrowers pay their mortgage interest if they lost their jobs through illness, accidents or unemployment.
Borrowers complain that mortgage protection plans make policyholders wait too long before starting to pay out, and cover often lasts for only 12 months or less. In many cases they have been sold to people who are not eligible to claim, either because they are self- employed or are working on short-term contracts, with too short a track record to qualify.
Mr Shurman also condemned banks for refusing to refund mortgage indemnity guarantee (MIG) premiums to borrowers who pay off their mortgages early. Borrowers who need to borrow more than 75 per cent of the value of their property are expected to pay a one-off premium of around 5 per cent of the excess they borrow, rising to around 8 per cent if they want to borrow up to 95 per cent of the valuation. The premium is deducted from the advance, and is used to insure the lender against losses if the property has to be repossessed and sold at a loss.
Unlike motor insurance, where part of the premium is refunded if the insurance is cancelled, banks and building societies refuse to refund MIG premiums, which means borrowers with MIG policies are often unable to take advantage of attractive fixed and discount-rate mortgages now on offer.
Bank customers can also challenge charges for selling a repossessed property if they feel they are unreasonable, the ombudsman said, even though charges are justified in principle.
But he warned that anyone who discovers an old bank deposit book showing a long-standing credit balance should not expect a windfall. In most cases, bank records show duplicates had been issued and the balances were actually paid off.Reuse content