Record numbers of consumers are making complaints about mortgages and secured loans – but increasing numbers of people are letting the situation get out of hand before seeking the help they need, the Financial Ombudsman Service revealed this week.
Last year, 13,659 people – the highest number recorded – contacted the Ombudsman for help with a mortgage or secured loan problem. Yet a third of those people had slipped into arrears before they sought help.
Of the remaining cases, it became clear that a large number of people struggling to make ends meet felt unable to say that they were facing significant financial problems – or were concerned about the impact of telling their lender of their situation.
The Ombudsman has also been working with lenders to make it clear that they’re expected to get creative when helping people get back on track – especially before payments are missed. And it says that although early signs suggest that this is having an impact, there’s still more that they can – and should – do to help.
Chief ombudsman Tony Boorman said: “Mortgages are the most significant purchase most of us will make in our lives, so we understand why people might be reluctant to say that they’re struggling to pay for their home.
“Many of the cases where people face losing their home have been heart-breaking to deal with – but could potentially have been avoided. So if money is tight, you should never be afraid to ask for help or guidance. Speak up sooner rather than later – there’s a lot that can be done to help before things get out of hand.
“Consumers and lenders all have a responsibility to work together when problems arise.”
Last year, around 20 per cent of mortgage complaints received by the Ombudsman were about interest rates and charges, in cases where the lenders had acted within their rights, and were among those not upheld.
The Ombudsman said that in many cases what the customer was seeking was unrealistic – like suspending payments or interest indefinitely, or writing off debt.
This has aroused suspicions that some borrowers are getting into financial difficulties and then complaining about their lender in a last-ditch attempt to dig their way out of trouble.
And yet the Ombudsman’s figures do not let the banks off the hook entirely. Over the six months from July to December 2013, an average of 30 per cent of mortgage complaints were upheld, and some of the larger lenders were among the worst offenders.
As many as 46 per cent of mortgage complaints against Barclays Bank, whose chief executive is Antony Jenkins, were resolved in favour of the customer – far more than for any other financial institution.
HSBC (35 per cent), Bank of Scotland, Clydesdale Bank – which includes Yorkshire Bank – (both 34 per cent) and NatWest (33 per cent) all came off badly on this score.
Santander, Lloyds Bank (both 29 per cent) and Leeds Building Society (27 per cent) all fared better than average, and Yorkshire Building Society shone in comparison, with just 10 per cent of mortgage complaints resolved in the complainer’s favour.
Matt Hammerstein, head of customer experience at Barclays, said that even one complaint was too many.
“We take all complaints seriously and are relentlessly focused on ensuring that along with finding an immediate resolution, we also tackle the root cause of the complaint to prevent other customers from being affected,” he said.
“We will continue to work closely with the Financial Ombudsman Service to ensure we significantly reduce the volume of complaints, as well as the overturn rates.”
The geographical distribution of mortgage complaints varied wildly. Of those 13,000, more than 2,000 came from London, over 1,000 from Scotland, but just 94 from Yorkshire and the Humber. A spokesperson from the Financial Ombudsman Service declined to speculate about the reason for this.