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Complaints about mortgage firms at all-time high

Data released by the Financial Services Authority today shows there were 30,014 complaints about mortgage firms in the first six months of the year, the highest number since the regulator started compiling the figures in 2006.

The figure was up on the 29,245 complaints firms received in the second half of 2010 and up from the 6,839 when the FSA started regulating mortgage firms in 2006.

The FSA data includes all the complaints firms report to it, while its firm-level data includes data from firms that report 500 or more complaints in a six-monthly reporting period.

Overall, firms reporting to the FSA received 67,309 complaints relating to home finance, compared to 64,220 in the second half of 2010.

Some 32,297 complaints were arrears related, with 2,929 relating to impaired credit mortgages, up from 2,681 in the second half of 2010.

Equity release complaints were also slightly up at 439, up from 383.

Some 45% of complaints about mortgage businesses were upheld in favour of the consumer, down from 48% in the previous period, with some £22m paid out in redress, compared to £15m in the second half of 2010.

Bank of Scotland received 12,080 complaints in the period relating to home finance with 49% upheld in favour of the consumer, while Cheltenham & Gloucester received 3,617 with 50% upheld and Royal Bank of Scotland received 2,103, with 81% upheld.

National Westminster Bank received 4,268 complaints relating to home finance, with 73% upheld, while Nationwide received 2,741 with 45% upheld and Northern Rock Asset Management received 2,616 with 44% upheld.

Santander received 8,961 home finance complaints with 42% upheld, while Barclays received 8,894 with 60% upheld.

Among the specialist lenders Southern Pacific Mortgages Limited received 858, with 35% upheld, Kensington received 813 complaints with 39% upheld and GE Money Home Lending received 730 with 28% upheld and Preferred Mortgages 682 complaints with 36% upheld

Mortgage Express also received 1,439 complaints with 39% upheld.

The overall number of complaints increased by 3% to 1,852,284 in H1 2011, with complaints about PPI up by 23% to 531,667.

The Financial Ombudsman Service also publishes data on the complaints it deals with. These are complaints referred to it by customers who are dissatisfied with how firms have handled their complaints.

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  • Luke Atkinson 29th September 2011 at 2:19 pm

    I completely agree with Mark C, this is a positive article for Brokers.

    I think we should also take another factor into account, one which the article completely overlooks. The increase in numbers of claims firms, their aggressive canvassing of consumers and their attitude of ”if in doubt, claim”, must have had an impact on these numbers.

  • Mark C 28th September 2011 at 2:55 pm

    I would urge the broking community not to get complacent and think this proves they are better than the banks.
    These are not comparing the merits of dealing directly with a bank or a broker.
    Very few complaints relate to advice at the time of a mortgage sale. Majority of complaints will be “service” issues that banks deal with post sale. Something that brokers are immune from. They will include Direct Debit issues. lost payments, product transfers, valuation issues, and a high proportion of Collection and Arrears management problems.
    Bank service may be poor in many ways, but this set of statistics prove nothing.

  • Ketan Yadav - Avenue & Co Private Finance 28th September 2011 at 12:05 pm

    Bank of Scotland plc has the highest number of mortgage complaints – in at 12,080 From Jan -June 2011. Of which, 47% of which were upheld by the firm!

    You will also see from the figures that the lenders who direct sell via branches eg staff have the highest number of complaints – probably due to the high sales targets givent to employees, with little consideration for good or proper advice. Compare that to the IFA networks – there are very few complaints.

    Interestingly, HSBC had more mortgage complaints than C&G in the same period (I dont think many are complaining with an SVR of 2.50% with C&G!).

  • john 28th September 2011 at 10:59 am

    whats a complaint….’anything which suggests a level of dis-satisfaction’ could be a moan or a serious complaint – as long as they are dealt with accordingly and learned from – dont really see what the story is

  • Jeremy 28th September 2011 at 9:49 am

    Natwest / RBS should be proud of the percentage figures in this report. No doubt a broker/IFA is to blame for the fact that 3/4 of all complaints about this bank are upheld. Couldnt be them could it ??? My Natwest branch says it was voted best lender AGAIN.

  • Jonathan Burridge 28th September 2011 at 9:29 am

    What is of great concern is the high percentage being upheld, the majority in many instances quoted.

    If the lenders complaints procedures were truly built around TCF and issue resolution the number of successful rulings would be in favour of the institutions. It is therefore a very concerning reflection on how successful a) the FSA regulatory system is and b) how seriously institutions take the regulatory system and their obligations to correct errors and/or be sympathetic.

    Bearing in mind that complains to the Ombudsman are only accepted after the institution has completed its own complaints procedure one would expect to see a majority to be in favour of the institution. Surely aiming to reach a solution during the internal process is far cheaper and more effective than allowing the matter to be reviewed by the Ombudsman (of course the objective would be to prevent the complaint in the first place).

    From a selfish point of view, we are all bearing the costs of ineffective customer management by these companies as we all contribute towards the upkeep of the regulatory bodies set up to prevent this very outcome. Further, the Regulatory will use these statistics to justify further regulation and control in an industry that is almost choked to death by the grip of bureaucrats as it is.

    It would be interesting to compare complaints against the institutions with complaints against intermediaries. I suspect that will tell a tale of where best advice and service sits.

    My views of the experience received by customers in financial difficulty are sadly reinforced by these figures. People in financial difficulty can find themselves very isolated and from personal experience I can say that being at the “wrong end” of the financial spectrum has a very different customer experience to being further up. Often, lenders are heavily process driven, more concerned with ensuring their paperwork is correct and a process is followed than seeking an outcome that is positive for both parties.