The Financial Ombudsman Service has warned that it expects complaints to surge by 25,000 in 2005.
Speaking at the Council of Mortgage Lenders annual conference, Walter Merricks, chief ombudsman at FOS, explained: “There was 55,000 complaints last year, this year at least 60,000 and unless something is radically changed, they could be going up to 85,000 the following year.”
As a result FOS has had to increase its staff from 550 two years ago to its current level of 950. The main source of complaints in relation to mortgages, ranged from administrative problems, absent records, the wrong type of mortgage commissioned and new Mortgage Day regulations.
FOS currently receives around 60 new mortgage complaints every week, double the number it received four years ago.
However, Merricks says he is not expecting an explosion of broker related complaints.
He says: “Over the last four years two thirds of the complaints have come from mortgage endowments.”
He also revealed the government had decided not to introduce an appeal system for FOS cases. Instead FOS would be concentrating on cases that have wider implications.
Merricks also expressed concern about the fact that only 20% of all cases from firms are referred to FOS, making it concerned as to whether the other 80% are being treated fairly.
With the sudden surge unregulated claims management firms offering their services to consumers instead, he says the Ombudsman is particularly concerned these firms dont give their clients false hope and were upfront about their fees.
He says: “It has fuelled the creation of claims management companies and within the sector there is wide agreement that these should be regulated.”
FOS is working with the FSA to look at these companies more closely.