The Financial Ombudsman Service has hit out at lenders for not doing enough to prevent complaints escalating as it publishes data showing mortgage complaints have risen 25 per cent year-on-year.
The FOS’ annual review shows in the year to 31 March there were 11,920 complaints about mortgages, up 25 per cent on the 9,537 complaints a year earlier. This follows an increase of 35 per cent in the previous year.
Of the 9,537 complaints about mortgages, 69 per cent related to banks, followed by 15 per cent relating to brokers, 8 per cent relating to building societies, 2 per cent to IFAs and 6 per cent to other types of firm, including non-bank lenders.
The FOS says it upheld 51 per cent complaints relating to banks, 42 per cent against IFAs, 38 per cent against mortgage brokers, 25 per cent against life companies and 17 per cent against building societies.
According to the FOS, the majority of complaints against lenders related to problems caused by administrative errors. It also received a number of complaints from consumers who were having difficulty repaying their mortgages and were not satisfied with the way their lender treated them.
The FOS says in many of these cases it found there had been little “meaningful communication” between the consumer and the lender and that consumers often felt frustrated their lender was not really listening to them, which led to them complaining to the FOS.
In the annual review, published today, the FOS says: “We were often able to help resolve these complaints informally – by bringing to light the full facts of the consumer’s situation and suggesting a range of options the lender might be able to offer. We resolved many mortgage-related complaints this way.
“But it remains disappointing to see cases escalated to us where the complaint could have been prevented if the lender had engaged more constructively with their customer in the first place.”
The FOS added it had seen evidence staff at some lenders were unable to explain adequately how their products worked.
It says: “From what we have seen, we could only conclude the staff at many lenders were themselves unable to explain clearly how their mortgage products worked – or to answer more difficult questions from their customers.”
There also continued to be complaints about movements in interest rates, particularly standard variable rates.
It also saw complaints about customers having their account taken over by a new lender following the sale of the original lender’s mortgage business. In some cases, the FOS said, the original lender had not explained the situation to the customer and the customer found their account being administered by a lender they had never heard of.