Mortgage complaints shoot up by a third

A record 9,537 complaints were made to the ombudsman in the financial year to the end of April 2012, with more than a third of those from people in “severe financial difficulties.”

The number of complaints was an increase of around a third on the previous year.

Early indicators suggest that the current year could also be a record breaking in terms of mortgage complaints. In the first few months of the current financial year, there were a further 2,234 complaints about mortgages.

Lack of communication?

More than a million home owners had their mortgage rates put up in May by lenders, who blamed the weak economy and the increased cost of funding a mortgage, the FOS said.

In the last financial year common complaints were that customers were struggling to keep up with payments, including cases where charges had been applied to the mortgage balance.

Lenders are required to treat customers sympathetically and make “reasonable attempts” to agree a repayment plan. However, the watchdog said that this is dependent on customers communicating openly with a lender.

It said that it is seeing an increase in complaints where people put off asking for help, meaning they have missed too many payments to be able to sort out their situation.

Payment protection insurance

The FOS’s latest complaint figures show that nearly 58,000 new cases, covering a variety of financial products, were opened between April and June and half of the cases dealt with were resolved in consumers’ favour.

Payment protection insurance (PPI) complaints made up more than half (56 per cent) of complaints during this period.

The ombudsman said that PPI complaints have been dwarfing other complaints due to the widespread PPI mis-selling scandal, with customers being sold insurance they did not necessarily want or need.

Between April and June, 32,445 complaints were made to the ombudsman about PPI and 69 per cent of cases were upheld in consumers’ favour.

Credit card accounts and current accounts were the next most complained-about topics, each generating 6 per cent of complaints to the ombudsman. Car and motorcycle insurance and overdrafts and loans each made up 3 per cent of complaints.