Bank complaints: the worst offenders named and shamed
A damning new report from the Financial Ombudsman reveals the shocking extent of discontent among bank customers.
Britain's high street banks were named and shamed by a damning report from the Financial Ombudsman Service (FOS) earlier this week. For the first time, this report identified the companies that the FOS receives most complaints about. Not surprisingly, the biggest banks with the most customers account for the lion's share.
In total, the big five high street banks – Lloyds Banking Group (which includes Halifax, C&G and Bank of Scotland as well as Lloyds TSB), Barclays, Royal Bank of Scotland, Abbey and HSBC – account for more than half of the 70,000 complaints received in the first six months of this year.
And remember, the FOS doesn't cover just banking and mortgage problems. It also covers building societies, credit card companies, insurers, investment companies, fund managers, financial advisers and pension firms. Our main high street banks clearly have a lot of disgruntled customers.
Barclays received the most complaints: notching up 8,200 in the six months to the end of June. But if all the banks and insurers now owned by the Lloyds group are considered together, the banking giant accumulated almost 14,000 complaints within this period.
The data goes further than simply logging where complaints came from. The ombudsman also published figures showing what proportion of the complaints are settled in the customers' favour.
Yet again, the banks are among the worst offenders. Abbey, Alliance & Leicester, Lloyds TSB, the Royal Bank of Scotland and Northern Rock all have more than two-thirds of complaints against them upheld. Credit card companies Capital One and Egg have almost nine in 10 complaints going against them, while Tesco Personal Finance has almost eight in 10.
Customer service standards appear to be worsening, too. As an average, almost six out of every 10 complaints about banking products – such as current accounts and savings – were decided in the customer's favour; in previous years this figure would have been closer to one in three.
In contrast, just one in three complaints about pensions or life insurance is upheld, and just 40pc of investment claims.
One of the biggest problems has been the widespread mis-selling of payment protection insurance (PPI), sold alongside loans and credit cards. With some firms, almost every complaint received about this product is upheld in favour of the consumer.
For example, 99pc of general insurance complaints made about Egg, Black Horse (the loan division of Lloyds TSB), MBNA Europe and FirstPlus Financial (part of Barclays Bank) were upheld in favour of the consumer.
The figures were almost as bad for Capital One, Lloyds TSB and Northern Rock, where 98pc of the rulings on general insurance went in customers' favour. The vast majority of these complaints concerned PPI.
The outgoing chief ombudsman, Walter Merricks, said he hoped the publication of this data would force individual firms to improve customer service and resolve more complaints themselves.
"We have already been providing comparative complaints data on a private basis to the larger financial businesses – but this has led to no improvement in the standard of complaints handling by the worse-performing businesses," he said. "Putting this information into the open will now give those worse-performing businesses vital encouragement to improve – which should mean fewer of their customers having to bring complaints to the ombudsman that should already have been resolved."
Consumer groups have welcomed this move towards greater transparency. Andrew Haggler, of Moneynet.co.uk, said this would encourage consumers to look at more than just the price when buying financial products. "It's great that consumers now have a yardstick by which to judge financial providers, and this will hopefully force some of the bigger players to smarten up their act," he said.
Anyone considering buying a financial product can check how many complaints the ombudsman receives about a provider, and what proportion it upholds. These can then be compared against industry averages. For example, the ombudsman upheld 81pc of all complaints against Lloyds TSB bank – far higher than the average of 59pc.
In contrast, just 41pc of complaints against Nationwide Building Society were upheld – far less than the industry average. Even on the controversial issue of payment protection insurance, Nationwide seems to fare better than its peers. The FOS upheld 63pc of all general insurance complaints, which includes sales of PPI.
This is less than the industry average of 70pc, and significantly less than the 94pc uphold rate against Royal Bank of Scotland and the 93pc against Barclays. This does not mean that Nationwide had any fewer mis-selling complaints, but it appears to have resolved more cases satisfactorily.
The insurers esure, Zurich, and Standard Life and the Skipton and Yorkshire building societies all have a far lower than average number of claims upheld against them.
The consumer organisation Which? welcomed the report as a "victory for consumers, but humiliating for the industry". Peter Vicary-Smith, Which? chief executive, added: "We'd now like to see the financial sector going further and publishing more data, particularly on brand names and product types.
"Over half of the complaints to the FOS are upheld in favour of the consumer; many should have been dealt with by providers' internal procedures before reaching that point."
A spokesman for Barclays said: "Barclays is committed to delivering a positive banking experience to our 22 million customers in the UK. Less than 1pc feel the need to complain about our services, and in most cases we are able to resolve their issues quickly."
A Lloyds Banking Group spokesman added: "The vast majority of our customers are satisfied with the service we provide across all of our brands. This is reflected in the low number of complaints we receive in relation to the high number of customer accounts we hold."
RBS said it resolved 91pc of complaints without them needing to be taken further.
In total, the big five high street banks – Lloyds Banking Group (which includes Halifax, C&G and Bank of Scotland as well as Lloyds TSB), Barclays, Royal Bank of Scotland, Abbey and HSBC – account for more than half of the 70,000 complaints received in the first six months of this year.
And remember, the FOS doesn't cover just banking and mortgage problems. It also covers building societies, credit card companies, insurers, investment companies, fund managers, financial advisers and pension firms. Our main high street banks clearly have a lot of disgruntled customers.
Barclays received the most complaints: notching up 8,200 in the six months to the end of June. But if all the banks and insurers now owned by the Lloyds group are considered together, the banking giant accumulated almost 14,000 complaints within this period.
The data goes further than simply logging where complaints came from. The ombudsman also published figures showing what proportion of the complaints are settled in the customers' favour.
Yet again, the banks are among the worst offenders. Abbey, Alliance & Leicester, Lloyds TSB, the Royal Bank of Scotland and Northern Rock all have more than two-thirds of complaints against them upheld. Credit card companies Capital One and Egg have almost nine in 10 complaints going against them, while Tesco Personal Finance has almost eight in 10.
Customer service standards appear to be worsening, too. As an average, almost six out of every 10 complaints about banking products – such as current accounts and savings – were decided in the customer's favour; in previous years this figure would have been closer to one in three.
In contrast, just one in three complaints about pensions or life insurance is upheld, and just 40pc of investment claims.
One of the biggest problems has been the widespread mis-selling of payment protection insurance (PPI), sold alongside loans and credit cards. With some firms, almost every complaint received about this product is upheld in favour of the consumer.
For example, 99pc of general insurance complaints made about Egg, Black Horse (the loan division of Lloyds TSB), MBNA Europe and FirstPlus Financial (part of Barclays Bank) were upheld in favour of the consumer.
The figures were almost as bad for Capital One, Lloyds TSB and Northern Rock, where 98pc of the rulings on general insurance went in customers' favour. The vast majority of these complaints concerned PPI.
The outgoing chief ombudsman, Walter Merricks, said he hoped the publication of this data would force individual firms to improve customer service and resolve more complaints themselves.
"We have already been providing comparative complaints data on a private basis to the larger financial businesses – but this has led to no improvement in the standard of complaints handling by the worse-performing businesses," he said. "Putting this information into the open will now give those worse-performing businesses vital encouragement to improve – which should mean fewer of their customers having to bring complaints to the ombudsman that should already have been resolved."
Consumer groups have welcomed this move towards greater transparency. Andrew Haggler, of Moneynet.co.uk, said this would encourage consumers to look at more than just the price when buying financial products. "It's great that consumers now have a yardstick by which to judge financial providers, and this will hopefully force some of the bigger players to smarten up their act," he said.
Anyone considering buying a financial product can check how many complaints the ombudsman receives about a provider, and what proportion it upholds. These can then be compared against industry averages. For example, the ombudsman upheld 81pc of all complaints against Lloyds TSB bank – far higher than the average of 59pc.
In contrast, just 41pc of complaints against Nationwide Building Society were upheld – far less than the industry average. Even on the controversial issue of payment protection insurance, Nationwide seems to fare better than its peers. The FOS upheld 63pc of all general insurance complaints, which includes sales of PPI.
This is less than the industry average of 70pc, and significantly less than the 94pc uphold rate against Royal Bank of Scotland and the 93pc against Barclays. This does not mean that Nationwide had any fewer mis-selling complaints, but it appears to have resolved more cases satisfactorily.
The insurers esure, Zurich, and Standard Life and the Skipton and Yorkshire building societies all have a far lower than average number of claims upheld against them.
The consumer organisation Which? welcomed the report as a "victory for consumers, but humiliating for the industry". Peter Vicary-Smith, Which? chief executive, added: "We'd now like to see the financial sector going further and publishing more data, particularly on brand names and product types.
"Over half of the complaints to the FOS are upheld in favour of the consumer; many should have been dealt with by providers' internal procedures before reaching that point."
A spokesman for Barclays said: "Barclays is committed to delivering a positive banking experience to our 22 million customers in the UK. Less than 1pc feel the need to complain about our services, and in most cases we are able to resolve their issues quickly."
A Lloyds Banking Group spokesman added: "The vast majority of our customers are satisfied with the service we provide across all of our brands. This is reflected in the low number of complaints we receive in relation to the high number of customer accounts we hold."
RBS said it resolved 91pc of complaints without them needing to be taken further.
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