Disgruntled of Tunbridge Wells would be proud: there was a 30% annual increase in the number of new complaints relating to financial services made by UK consumers in the 2007/2008 financial year. But all joking about moaning British stereotypes aside, making a complaint shouldn’t be frowned upon. If you feel you haven’t received the service or product you should have, the Financial Ombudsman Service (FOS) is there to assess your case and work out some kind of resolution.

Speaking out

The FOS handled a record 794,648 consumer enquiries and 123,089 new complaints over the last financial year, showing many UK consumers aren’t afraid to take advantage of the service. The number of mortgage disputes doubled during the 2007/2008 financial year and made up 5.5% of all complaints made, with mortgage endowments accounting for 11%.

Complaints about current accounts comprised 32% of all cases and there was a ten-fold increase in complaints about charges – not surprising given the current publicity surrounding the Office of Fair Trading’s legal test case in the High Court involving eight major UK banks.

The number of complaints lodged about payment protection insurance (PPI) increased six-fold, making up 8.5% of all complaints. The vast majority related to how policies were sold, rather than rejected claims, according to the FOS.

Chris Cummings, director general of the Association of Independent Financial Advisers (AIFA), a trade body for advisers, says: “The considerable drop in mortgage endowment complaints has been masked by a significant increase in complaints about banking charges and PPI, pushing up the headline figure. It has been stated that the number of PPI complaints received in the last three months outnumber the total number of PPI complaints received in the previous year, so this is an area that may continue to increase.”

Bad impression

So what does this say about the UK’s financial services industry? Should it be ashamed of the rising level of complaints or is it simply due to a more informed public becoming aware of their rights and the correct procedure for making a complaint?

Whatever the true reason, it’s worth considering that the UK financial services industry is a massive sector comprising thousands of different types of companies – from sole trader advisers right up to huge insurance and investment companies. In fact, Cummings believes it is these bigger firms that generate the bulk of the complaints, not Independent Financial Advisers (IFAs). “The [FOS] review substantiates AIFA’s view that the vast majority of complaints brought to FOS are related to large financial institutions, and only a small proportion of complaints are generated by IFA firms,” he says.

“The report shows that the number of complaints against IFAs has dropped this year by two thirds, despite an overall increase of 30%, resulting in the percentage of complaints brought against IFAs being a mere 4%. This is a clear endorsement of customer satisfaction, especially as IFAs are the major distribution channel for financial advice and products.”

The FOS says that more than 95% of the businesses it covers had no complaint referred to the service during the 2007/2008 financial year. For those repeat offenders however, proposals by UK regulator the Financial Services Authority (FSA) could ensure red faces all round. In a discussion paper entitled “Transparency as a regulatory tool”, the FSA suggested publishing a league table of complaints data to name and shame those firms that have had the most complaints made about them. The table would be available on its website for all to read. This proposal is still in the early discussion stages (the FSA has invited comments from the industry to be made by 29 August 2008), but shows how seriously the regulator takes such issues.

It’s certainly common to be embarrassed about complaining about bad service, after all how many times have you been appalled by the quality of food or a member of staff’s attitude in a restaurant, only to leave without a word to the management – paying your bill and perhaps even leaving a tip too? Buying a meal is obviously not on the same scale as taking out a mortgage or even choosing the right insurance, so hopefully you’d be more inclined to speak out if you thought there was a problem with your finances. The next time you feel you haven’t got a fair deal, why not consider taking the matter further? Follow the steps below to ensure the best possible outcome.

How to make a complaint

Step one: Get in touch with the company that provided the product or service. Put your complaint to them in writing and keep records of any contact.

Step two: If the company involved does not send a final response to your complaint within eight weeks or sends you its final response but you still aren’t happy, then you can get in touch with the Financial Ombudsman Service (FOS). You can call on 0845 080 1800 to give details of your complaint, including what you would like the business to do to rectify the situation.

Step three: The FOS will begin by dealing with the situation informally, by getting in touch with the company, weighing up the facts provided by both parties and telling each what it thinks should happen.

Step four: If the dispute cannot be sorted out informally, the FOS will interview both you and the company further and may require more documents relating to the case. According to the FOS, it takes an average of six to nine months to settle most disputes. Many are settled without an ombudsman’s decision, but, if this is required, that decision is final.

Step five: If you still do not agree with the decision you can go to court. Other reasons for going to court include: if the dispute involves more than £100,000, if you want to inspect all the related papers personally, or if you want to ask your own questions about the case. You can speak to the FOS before going to court, but the body will not usually handle a case that has already been considered by a court or where court action is due to take place.

For more information, visit the FOS website.