Sharp rise in complaints against mortgage firms in 2010

4 October 2010 | By Natalie Thomas

Complaints about mortgage busi-nesses rose two-thirds in the first half of 2010 compared with the last six months of 2009.

The Financial Services Authority has released complaints figures for the first six months of 2010, which show there were 22,662 complaints about mortgage firms in the first six months of 2010, up from 13,232 in the last six months of 2009.

Redress paid by mortgage businesses in this six-month period totalled £12.3m, up from £5.1m in the last half of 2009.

The data shows there were 2,196 mortgage businesses registered with the FSA as of March 2010.

There were 2,269 complaints relating to impaired credit mortgages, compared with the 2,573 in the last half of 2009 and 550 com-plaints about equity release products, up from 383 in the second half of 2009.

The FSA has also published complaints made against individual firms. Bank of Scotland received 9,071 complaints relating to home finance, Barclays 7,818 and Cheltenham & Gloucester 2,777.

Mortgage Express received 1,125 complaints, GE Money Home Lending 912, Preferred Mortgages 585, Southern Pacific Mortgage Limited 632 and Kensington 557.

Firms are required to report complaints to the regulator. The FSA publishes data from firms that report 500 or more complaints in a six-month reporting period. The Financial Ombudsman Service publishes complaints referred to it by consumers.

The FSA has also proposed changes to its complaints handling process and increasing the limit on compensation awards made by FOS from £100, 000 to £150,000 to provide fairer and more effective redress for customers. It also wants com-panies to identify a senior indi-vidual who is responsible for complaints handling.

Sheila Nicoll, director of conduct policy at the FSA, says: “Good com-plaints handling should be the rule not the exception.” Robert Sinclair, direc-tor of the Association of Mortgage Intermediaries, says: “The FSA figures are raw and don’t explain why the complaints were made. They don’t show whether they were about a lender’s processing or advice that was given.

“If they were about advice you would expect to see some larger brokers appearing in the data, but we are not seeing this.”

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