Sub-prime complaints rocketing in recession
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Complaints about sub-prime mortgages have increased by more than two-thirds in the last two years, figures from the Financial Services Authority show.
In the first six months of the year regulated firms received 2,629 complaints relating to sub-prime mortgages, up from 2,292 in the last six months of 2010 and 1,810 in the first six months of 2009.
Among the specialist lenders Southern Pacific Mortgages Limited received 858 complaints with 35% upheld, Kensington had 813 with 39% upheld, GE Money Home Lending received 730 with 28% upheld and Preferred Mortgages received 682 with 36% upheld.
Overall, there were 67,309 complaints relating to home finance products, compared with 64,220 in the second half of 2010.
Of these, 30,014 related to mortgage firms in the first six months of the year. This figure was up on the 29,245 complaints firms received in the second half of 2010 and the 6,839 received in 2006 when the FSA started regulating mortgage firms.
Some 45% of complaints about mortgage businesses were upheld in favour of consumers, down from 48% in the previous period, with around £22m paid out in redress, compared with £15m in the second half of 2010.
Bank of Scotland had the most complaints about home finance products at 12,080, with 49% upheld in favour of the consumer, while NatWest received 4,268 complaints relating to home finance, with 73% upheld. Cheltenham & Gloucester had 3,617, with 50% upheld.
The overall number of complaints against FSA regulated firms increased by 3% to 1,852,284 in the first six months of 2011, with complaints about payment protection insurance up by 23% to 531,667.
Sue Berwick, senior compliance analyst UK at regulatory compliance firm Wolters Kluwer, says: “It has been suggested that consumers are more willing to complain during a recession.
“While in better times they may sometimes weigh up losing some money against what they see as the hassle of complaining, in tough times they are more likely to pursue complaints.”
She says it will be interesting to see what happens to the complaints figures once the PPI bubble has burst and when the economy improves, as logically the number of financial services complaints to the FSA should decrease.
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