Recession-hit banks flooded by 3m complaints in a single year as they get tough on customers

By James Coney
Last updated at 1:08 PM on 04th September 2009

Consumers are making almost 3million complaints a year to banks, building societies and insurance companies, figures released for the first time reveal.

The data published by the City regulator Financial Services Authority charts the soaring levels of complaints financial firms are receiving about credit cards, current accounts and tax-free Isas.

They also show a constant stream of problems about overcharging, poor customer service and administrative errors.

Customers made 3 million complaints about overcharging, poor customer service and administrative errors to banks and building societies last year

Two out of every three complaints made is about banks, with more than one million alone made in the last six months of 2008. But while the numbers of complaints has risen dramatically, the percentage that are being rejected has also climbed.

This has prompted fears that thousands of customers may be being given short shrift by banks and insurers.

A spokesman for the independent complaints handler Financial Ombudsman Service said: 'We have seen signs that firms are getting tougher with consumers, possibly because of the financial pressures they are under.

'They are digging in their heels and are a lot less prepared to settle by giving consumers a goodwill gesture. Instead they are standing their ground.'

The FSA figures are based on information handed over by all the UK's banks, building societies and insurance firms between 2006 and 2008. They show precisely how many complaints each type of organisation is receiving, what customers are complaining about, and how many are being found in their favour.

Phil Jones, personal finance campaigner for consumer group Which?, said: 'It's a poor reflection of the industry that there are some many unhappy customers out there. Financial firms simply aren't treating consumers well enough and things must change if the industry is to rebuild its reputation.'

The data highlights how between the first six months of 2006 to the last six of 2008, complaints about banks increased by a third.  In this time current account complaints virtually doubled to 536,000,  problems with credit cards tripled to 151,000 and cash Isa complaints quadrupled to 39,520.

However, the number of customer complaints upheld by financial firms dropped from 49 per cent to 40 per cent. Only building societies found in favour of their customers more than half of the time.

Yet when these complaints eventually reach the ombudsman it finds in favour of the consumer in 60 per cent of cases.

In 2008 around half a million consumers made separate complaints about overcharging or poor customer. The figures also highlight, for the first time, the tide of customers who tried to reclaim unfair bank charges.

At the beginning of 2006 some 97,000 customers lodged objections about overcharging, but just 12 months later banks were handling 651,901 complaints.

The FSA's revelations are part of a drive to become more transparent and consumer friendly. Later this month the ombudsman will, for the first time, name and shame those firms it receives the most complaints about.

A spokesman for the British Bankers' Association said: 'The vast majority of bank customers have no problems with their accounts and the services they use.

'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.

'Whilst no one wants to receive complaints. Banks will always try to solve speedily any problems their customers have.'

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