Complain sailing
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Household names dominated the figures, with the operations of Abbey National, Barclays, Lloyds Banking Group, HSBC and RBS accounting for 38,286 of the 69,841 new complaints received by the FOS in the first six months of this year.
Banking and credit cards and general insurance, including payment protection insurance, accounted for the biggest numbers of complaints but the mortgage industry did not emerge unscathed.
The latest Council of Mortgage Lenders' newsletter points out that out of the 140 firms covered by the FOS data, 118 had fewer than 30 complaints against them and 89 firms had no complaints about mortgages.
But the data covers complaints for all areas of financial services. It includes not just mortgages and home finance, but also bank accounts, pensions, insurance, investment and credit cards.
Just as it would be surprising to find specialist mortgage lenders such as GMAC or Mortgage Express featuring amongst firms receiving complaints against them for pension transfer complaints, it is also unlikely for Lloyd's of London or The Carphone Warehouse (just two of the companies among the 89 companies with no mortgage complaints) to generate complaints over mortgage advice.
The companies which have the most mortgage complaints are the big high-street banking brands. The top three were Bank of Scotland, with 563 complaints, Barclays Bank, on 371, and Abbey National, with 299. Another five lenders received over 100 complaints, with Nationwide on 191, Cheltenham & Gloucester getting 159, Alliance & Leicester at 116, Northern Rock with 108 and Natwest with 106.
But the British Bankers' Association and several big lenders have pointed out that this is perhaps not very informative. Businesses with the most customers could well receive the most complaints simply on a statistical basis.
BBA executive director Eric Leenders says: "Millions of transactions for millions of customers go through the banking system every day and while it is inevitable that occasionally things go wrong, banks are not complacent and are continually working to improve service and efficiency,"
Perhaps more informative are the percentage of upheld complaints. Here, the mortgage industry does look comparatively good.
The average percentage of cases found in favour of the complainant across all areas of financial services is 59 per cent, with general insurance coming out worst, with 70 per cent of complaints upheld. This is followed by banking and credit, at 61 per cent uphold rate, and investment on 42 per cent.
Mortgages had 41 per cent of complaints upheld by the FOS, with only life and pensions having a lower uphold rate.
London and Country Mortgages technical manager Richard Morea says: "It is a favourable comparison for the mortgage market. Part of that will be due to the regulation of mortgages that has been in place for the last two years."
But these statistics also do not tell the full story. The lowest rate of upheld complaints in the FOS data is 30 per cent for Bank of Ireland. Seven lenders have complaint uphold rates of over 50 per cent, with GMAC-RFC with the highest rate at 75 per cent.
So far, the FOS has not published the nature of the individual complaints but Email Mortgages chief executive Michael White says it is likely that most of the complaints refer to mortgage arrears.
He says: "As an intelligent guess, it almost certainly has to do with the arrears' process. When you have the Government asking for forbearance from the mortgage lenders, it is likely to increase the number of complaints in this area."
Morea suggests that non-refundable application fees may also be a cause for complaint. He says: "Another thing you might see complaints over is lost fees, mortgage arrangement fees, valuation fees. These are generally non-refundable if the mortgage does not go through. Although these are set out in black and white in the key facts document, they can often be overlooked."
White says he supports the disclosure of the information as, under normal market conditions, it can help to inform the decision of which mortgage lender to go with.
He says: "It has never been about price alone. There has always been an element of headline-searching and of lenders wanting to achieve the top rates. But people look for a deal that comprises a number of factors. Price is a factor but there are a number of other issues to take into account."
In addition, the disclosure of more detailed information can make the process of selecting a mortgage even harder for consumers and the job of a broker even more important.
White says: "This sort of intelligence is something that can cause people to say, it is not as straightforward as I thought, perhaps getting advice is not a bad idea'."
One thing the first batch of complaint figures are unlikely to be is a reliable indicator of where future complaints are going to come from in the mortgage market. With so few lenders in the market, White jokes that the most common complaint right now is likely to be about the difficultly of obtaining a loan.
Lenders with most complaints received
Bank of Scotland 563
Barclays Bank 371
Abbey National 299
Nationwide 191
Cheltenham & Gloucester 159
Alliance & Leicester 116
Northern Rock 108
Natwest 106
HSBC 106
Royal Bank of Scotland 94
Complaints received by the Financial Ombudsman Service betweenJanuary 1, 2009 and June 30, 2009Lenders with most complaints upheld
GMAC-RFC 75%
GE Money Home Lending 60%
Preferred Mortgages 58%
Lloyds TSB 58%
Barclays Bank 55%
Clydesdale Bank 52%
Abbey National 52%
Southern Pacific Mortgages 49%
Natwest 45%
Royal Bank of Scotland 42%
Complaints resolved by the Financial Ombudsman Service betweenJanuary 1, 2009 and June 30, 2009
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