The number of new complaints received by the Financial Ombudsman Service (FOS) exceeded half a million in 2012/13, reflecting an increase of 92% on the previous year.
As expected, the mis-selling of payment protection insurance (PPI) dominates the figures, constituting 75% of all new cases.
The 378,699 new cases opened in the past year represent a rise of 140% on the previous year.
Those in the North East, where budgets are particularly stretched, were most likely to file new PPI complaints, the FOS said.
But most other sectors also saw worrying rises. New complaints about mortgages rose by a quarter, to 11,920, while complaints about current accounts rose by a third, to 19,560.
Customers have complained that they have been unable to use the advertised benefits of their packaged current accounts, while some have said that their banks have switched them from free accounts to paid accounts without informing them.
The FOS said that it had supported the claimant in just under half (49%) of all the 508,881 disputes.
It attributed the huge rise in complaints to a combination of customers being more willing to complain and firms failing to handle those complaints satisfactorily.
“We have seen a much stronger consumer voice in the last year, with people becoming more aware of their rights and less willing to put up with poor customer service,” said chief ombudsman Natalie Ceeney.
“As levels of confidence in financial services have eroded, it is disappointing that we still have not seen any significant improvement in complaints handling.”
Lloyds Group, backed by the British Bankers Association, said that claims management companies had encouraged people to submit false complaints.
Claims Management Companies
The British Bankers Association (BBA) blamed the rise in complaints on claims management companies, which, it said, have encouraged people to submit claims regardless of eligibility or their chances of success.
Back in February, the chief executive of Lloyds Banking Group, Antonio Horta-Osorio, wrote to the Justice Secretary asking for claims management firms to be penalised for any false complaints they had generated (read more).
Banks face a charge of up to £850 by the Ombudsman for almost every referred complaint, regardless of the outcome, while claims management firms are not liable for any fees.
But the FOS said that the number of claims driven by these companies had fallen by 12% as consumers realised that they could pursue complaints themselves without facing any fees from third parties.
The service is considering another recruitment drive to handle the sheer volume of complaints, which reached 7,000 per working day last year.
Keith McDonald
Which4U Editor
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