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Your Money > Banking Articles > Consumer Rights: How to get your money back
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By Sarah Modlock
For a nation that bemoans the weather, whinges about football results and is developing an unhealthy taste for road rage, we don't complain nearly enough about things that really matter. When it comes to financial products, many people are too embarrassed to admit there is a problem; it's easy to feel stupid in world where many advisers speak a whole new language. But it's precisely because the experts don't always get it right that we should all become better at following through with complaints and getting redress. Figures released in May show that nearly 60% of those who complained to the Financial Ombudsman Service (FOS) in the last financial year won some compensation. The FOS exists to sort out disputes between financial services firms and their customers if a complaint to the firm cannot resolve the issue first. Its annual report said there was a 14% increase in the number of disputes it decided, a record of 114,000. Of these, 57% went in favour of the complainant, a far higher proportion than in the past. So which products are causing the problems? In a climate where lenders are under pressure, it seems credit cards, loans and payment protection insurance complaints have dramatically increased. Sir Christopher Kelly, chairman of the Ombudsman service, said the recession was producing many more disputes. "For us, it has involved dealing with a significant increase in the number of complaints arising from the impact of the worsening financial climate," he said. "As businesses tighten their belts - and the credit crunch leads to increased financial difficulty for many consumers - we are gearing up to deal with further volatility in complaint volumes," he added. Credit cards: Nearly 19,000 people sent in complaints about their credit cards and three quarters of them were upheld by the FOS. The rise of around a third was partly because of default charges applied where someone had to pay extra for missing a repayment date or spending over their limit. But it was also driven by hikes in interest rates. The ombudsman was particularly concerned about firms raising rates for “higher-risk” customers without justification. In some cases, borrowers reported rises of more than 10%. Where there is no evidence of you having been re-assessed as higher risk, you can challenge the move — and the FOS is likely to rule in your favour. "As part of our investigation into these complaints, we issued questionnaires to the credit-card companies involved, to obtain information about - among other things - the actual assessments of risk that had been carried out in relation to these customers, and how the new rates had been calculated," Ombudsman Walter Merricks reported. "Almost all the credit-card companies subsequently chose to settle the complaints that had been brought against them, rather than have our investigation continue," it reported. Current accounts: Complaints about our bank accounts dropped by two thirds to 13,682 because of the continuing High Court test case on overdraft fees and the freeze on new claims. Insurance: Disputes about insurance rose 84%, driven by a tripling of the number of complaints over payment-protection insurance (PPI), which is designed to help you repay loans and meet credit card repayments if you lose your job or cannot work because of illness or injury. The insurance is renowned for being laced with exclusions which mean it does not pay out early enough or for long enough and does not pay up enough to meet the policyholder's needs. Adding insult to injury is the fact that this cover is usually expensive to have and you only find out that it doesn't deliver when you really need it most. The consumers' association, Which?, says that at least 2 million people have PPI policies they will never be able to claim on and many more of the 35million in existence are believed to have been mis-sold. The FOS looked into 31,066 complaints (a huge rise of 191%), and 89% of consumers won their cases. Complaints over home insurance also leapt 27%, as policyholders filed more claims and insurers “resisted them more vigorously”. The future sale of the policies will now be severely restricted, following recent decisions by the Financial Services Authority and the Competition Commission. Mortgages: Complaints about mortgages rose by 11%, largely due to disputes over the handling of mortgage arrears, of which 40% were upheld. New rules state that lenders must explore options to help people stay in their homes, such as extending the loan term. Disputes about mortgage endowment policies continued to fall and were down by more than half on the year before to 5,798. Investments: Poor stock market conditions could “expose poor advice and sales, for example, where consumers willing to accept only a low risk to capital find they have invested in a higher-risk product” said the Ombudsman, following a 111% surge in complaints about investments. Complaint-dodging It's not just customers that fail to make a stand when it comes to problems though. It will come as no surprise to many that financial companies are being deliberately unhelpful with the customers who do complain. Ombudsman Walter Merricks said that some firms were cynically trying to stop dissatisfied customers taking their complaints further and this could mean that customers who never get as far as the FOS are being denied millions of pounds in compensation for mis-selling because they are being fobbed off. Merricks has called the law to be changed to allow US-style class-action lawsuits to help customers get redress, as its annual report revealed that nearly 60% of complaints were going in favour of consumers, compared with a normal level of 30% to 40%, suggesting that firms are denying genuine claims. Which? said it was shameful that some firms were rejecting claims that were later upheld. "This could be just the tip of the iceberg as many people give up at the first hurdle rather than going to the Ombudsman," said Doug Taylor of Which? "Companies have a duty to treat their customers fairly and this means giving all complaints due consideration and, if appropriate, accepting them." How to complain With financial products and services, you should complain in the first instance to the firm that sold you the product. It will have eight weeks to respond to you. If you don't hear back during that time or if your complaint is rejected, you have six months to take your case to the Financial Ombudsman Service. Call 0845 080 1800 or visit financial-ombudsman.org.uk . The FOS generally deals with cases up to six years after you believe you were mis-sold a product but this can be extended by a further three years in certain cases. • When writing to the company that sold you the product, I highly recommend that you avoid customer service telephone numbers and emails and use good old fashioned snail mail. A 'real life' letter usually has much more impact than a call or email, I find. • Don't dawdle. It may not be the highlight of your day but make sure you act promptly. • You don't have to write to the person you originally dealt with. I always find out the name of the chief executive or chairman and write to them. • Be concise. Unless your case is particularly complex, aim to keep the letter to one page. Set out the problem in a couple of paragraphs then set out what you would like the firm to do about it, making sure your expectations are realistic. • Stay calm and polite at all times, however angry or upset you feel. Losing your cool, swearing or being rude will give the firm an excuse to refuse to deal with you. • Make copies of the letter and any attachments you are sending. I send these letters via recorded delivery so they can never claim it got lost in the post. It's worth the extra 75p. • Make a note in your diary for the date by which you expect a response so that you can make your next move. Useful links: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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