Big increase in financial complaints

The number of people complaining about financial services firms soared by 26 per cent in the past year as disputes involving controversial payment protection insurance doubled, the Financial Ombudsman Service said.

The ombudsman received more than one million inquiries from consumers in the 2010/11 financial year – the equivalent of around 4,000 every working day – a fifth of which turned into formal complaints.

A record 206,121 new disputes were looked at by the service in the year – 51 per cent of which related to payment protection insurance (PPI).

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Overall, the ombudsman handled 104,597 complaints relating to PPI, more than double the number the previous year, and the highest number of complaints received about a single financial product.

But disputes about PPI should start to fall after the banking industry abandoned its legal battle over mis-selling claims.

The move has paved the way for more than three million people to receive compensation, while providers must also proactively contact customers and alert them to the fact they may be entitled to redress if they identify a pattern of mis-selling.

Natalie Ceeney, chief ombudsman, said: “This year has been the busiest in our 10-year history – with over 200,000 disputes referred to us and a million frontline inquiries.

“Aside from PPI cases, over the year we’ve seen encouraging signs of improvements in the way that some businesses are handling complaints.”