Surge in complaints against banks over pension, insurance and mortgage deals

Tens of thousands of consumers have been forced to take their PPI claim to the ombudsman

Complaints to the financial ombudsman over mortgages, life assurance and pensions, and general insurance soared in the last half of 2011.

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The proportion of complaints upheld by the ombudsman also jumped from just under half (47 per cent) to almost three quarters (72 per cent). Between July and December complaints about life cover and pensions rose by 42 per cent, over mortgages by 38 per cent and over general insurance by 22 per cent. The rise in complaints comes as MPs are being called on to toughen up the Financial Services Bill and particularly the powers it gives to the new Financial Conduct Authority, which is meant to protect consumers.

Peter Vicary-Smith, the chief executive of the consumers' body Which, said: "[The] data from the Financial Ombudsman Service is further evidence that some banks are systematically failing to treat their customers fairly when things go wrong. It is especially unacceptable that tens of thousands of consumers have been forced to take their PPI compensation claim to the ombudsman, where the overwhelming majority of complaints are then upheld."

Lloyds Banking Group again topped the list of the institutions receiving the most complaints, followed by Barclays and the credit card group MBNA.

The overall number of complaints received by the ombudsman, who only accepts cases once they have been rejected or failed to be dealt with by banks, fell but only due to a one-off drop in payment protection insurance mis-selling cases.

This was because the Financial Services Authority gave the banks extra time to handle the huge backlog of cases once they lost their legal action in April.

The chief ombudsman Natalie Ceeney said yesterday she expected PPI complaints to soar to 165,000 in the coming financial year, far more than the 125,000 seen in the current one.

She said: "The proportion of complaints that we have upheld in favour of the consumer, ranging from 6 per cent to 100 per cent, clearly highlights the difference in PPI complaints handling across major businesses over this period. It also reflects the efforts made by some businesses to resolve quickly the hundreds of thousands of PPI complaints that had built up during the banks' unsuccessful PPI legal challenge. We now hope to see all businesses who were involved in PPI mis-selling resolving their customers' complaints fairly, properly and quickly."

The ombudsman data show that in the past six months almost 99 per cent of the complaints over PPI mis-selling about Barclays, MBNA and Lloyds were found in favour of the consumer. That contrasts with Nationwide at 7 per cent and Capital one at 11 per cent.