Complaints about mortgage firms up two-thirds

30 September 2010 | By Natalie Thomas

There were 22,662 complaints about mortgage businesses 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 only 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.

There were 550 complaints 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 and Barclays 7,818, with Cheltenham & Gloucester 2,777.

Mortgage Express, which no longer lends received 1,125 complaints, with GE Money Home Lending 912, Preferred Mortgages 585, Southern Pacific Mortgages Limited 632 and Kensington 557.

Firms are required to report to the FSA complaints they have received during the year, the Financial Ombudsman Service also publishes complaints that have been referred to them.

The FSA has today proposed changes to its complaints handling rules as part of a package of measures to drive up standards of complaints handling within the industry.

It proposes to increase the limit on awards made by the FOS from £100, 000 to £150,000 to provide fairer and more effective redress for customers.

It says today’s consultation paper is key to the FSA’s consumer protection agenda and is aimed at ensuring that more firms resolve complaints promptly and fairly.

Proposals include:

• Requiring firms to identify a senior individual responsible for complaints handling;
• Abolition of the ‘two-stage’ complaints handling rule to incentivise firms to resolve complaints fairly the first time;
• Underlining the requirement for firms to carry out root cause analysis, by identifying and remedying any recurrent or systemic problems with complaints, and to take action where appropriate; and
• Additional guidance in relation to taking account of ombudsman decisions and previous customer complaints and learning from the outcome.
• The FSA has also published firm-specific complaints data, enabling customers, for the first time, to compare and contrast the way different firms deal with their complaints.

Sheila Nicoll, the FSA’s director of conduct policy, says: “Good complaints handling standards should be the rule not the exception and complaints handling forms a key part of our intensive and intrusive approach to supervise how firms deal with their customers.

“While the FSA’s review into complaints handling by banks in April found some good practice, this is far from universal and it is clear that not enough is being done by senior management to prioritise complaints handling. Dealing fairly and effectively with customers who make a complaint provides a valuable opportunity for firms to rebuild and enhance their relationships with their customers.

“We will continue to work closely with firms to help push up standards in this area and to deliver improvements in the way firms treat their customers and we have already referred two firms to enforcement as a result of poor complaints practices.

“The firm specific complaints data published today is also a step in the right direction towards improving transparency for customers.”

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