Complaints against financial providers have risen steadily during the recession. Hannah Ricci looks at our top 10 complaints and shows how best to go about getting a resolution.

When it comes to complaining, we tend to fall into two camps. We're either forthright and voice our grievances about companies that have made mistakes or given us terrible customer service, or we seethe in silence, not wanting to make a fuss.

However, while there are certain facts of financial life we just have to put up with – like terrible hold music or pages of small print – we do have a right to voice valid complaints.

If you've been on the receiving end of poor customer service, been mis-sold a product or suffered an error that's cost you time and money, then you should expect the issue to be investigated and rectified.

According to the Financial Ombudsman Service (FOS), the organisation set up to settle disputes between consumers and providers of financial services, more of us are making our grievances known. Over the past 12 months, it received 140,832 complaints – an increase of 26% on the previous year.

So this month Moneywise set out to find what areas of financial services receive the most complaints and what your chances are of finding a successful resolution.

If you have a grumble about a bank or provider, we show you the most effective way to complain, as well as where complaints departments draw the line.

1. Payment protection insurance

Our most common financial bugbear – payment protection insurance (PPI) – is intended to cover repayments on credit agreements, such as personal loans, mortgages and credit cards, if you find yourself unable to work due to illness or injury.

But the reality is very different, and the Ombudsman received 35,540 complaints regarding PPI this year – up from 23,280 last year.
 
The Ombudsman told us that the majority of complaints from consumers are regarding sales. Common consumer grievances are that the pricing was not explained to them, they were led to believe they had to take out the policy to get the loan or that, having looked at the restrictions, it was clear they would never have been able to make a claim.

Earlier this year, the Competition Commission announced an outright ban on banks and building societies selling PPI to borrowers at the point of sale, yet this ban has been put on hold after a challenge by two high-street banks. As Moneywise went to press, the Competition Commission was carrying out further investigation into whether a ban is the appropriate form of action.

If you feel you have been mis-sold a PPI policy, it's likely you will be entitled to a full refund as the Ombudsman upheld 89% of claims last year. However, if you've already received a payout on your policy, you won't be eligible for a refund.

2. Current accounts

This is a common problem area as it's a service most of us have and use on a daily basis. The Ombudsman received 18,821 complaints about current accounts this year, a huge increase on the 10,779 recorded in 2007/2008.
 
We tend to use these accounts to manage our income and spending, and errors are common. The majority of complaints are related to maladministration, in the form of disputed transactions, and problems with direct debits or standing orders.

The recession has seen an increase in complaints from consumers in financial hardship, who are struggling to remain within overdraft limits and incurring penalty charges as a result. Overall, 61% of current account complaints were upheld by the Ombudsman this year.

If the bank has made an error, it's reasonable to expect an apology and for the mistake to be swiftly rectified, including reimbursement for any penalty charges.

The ongoing area of contention is of course unauthorised overdraft charges applied due to the fault of the customer. Until the legal position on these charges is clarified, the Financial Services Authority (FSA) has ruled that individual complaints be put on hold.

This means if your complaint is currently with your bank or the Ombudsman, you'll have to wait for a decision. If you want to complain, you still can: your bank or building society must acknowledge and record your complaint, but it will not be dealt with until the legal test case is resolved. This is expected to happen in the near future.

The issue is slightly different if your complaint involves bank charges and financial hardship. It's important to inform your bank if you're in genuine hardship and give them all the necessary information, such as a detailed monthly budget.

If your bank or building society agrees that you're experiencing financial hardship, it should suggest an appropriate settlement – which may or may not involve a refund of charges.

3. Credit cards

The Ombudsman received 17,983 claims regarding credit cards this year, up from 14,519 on the previous year. The main cause for complaint is issues regarding claims under section 75 of the Consumer Credit Act 1974.

Section 75 is a form of consumer protection and states that customers who have a claim against a supplier or retailer for misrepresentation or breach of contract will generally have an equal claim against the credit card issuer.

Claims are often made to card issuers when the supplier has gone out of business or disappeared – an increasingly common problem since the credit crunch reared its ugly head in 2007.
 
According to the Ombudsman, card companies will often tell customers that they must first get a court judgment against the supplier. This is incorrect and customers can choose whether to claim against the supplier, the card issuer, or both.

Other common credit card complaints relate to things like maladministration of interest calculations and payments, and disputed transactions. Fortunately for customers, credit card complaints have a relatively high resolution rate and the Ombudsman upheld 76% of claims this year.

4. Residential mortgages

We're dealing with large sums of money when it comes to mortgages, so fortunately complaints that reach the Ombudsman stage are considerably lower compared with the top three financial complaints, and they're falling. The Ombudsman received 7,462 mortgage complaints this year, down from 7,532 the year before, and 40% were upheld.

The most common grievances relate to disputes over fees and charges, and administration. Tightened household budgets have increased the number of complaints related to mortgage affordability, with consumers making late payments or missing them altogether, and being unhappy with how their situation has been dealt with.

Mortgage exit fees – which were the subject of a huge consumer campaign in 2007 – remain a common complaint, and many homeowners who claim against them receive refunds.
 
Mortgage lenders have been accused of levying unfair exit fees, applied when borrowers switch to a new lender or clear their mortgage at the end of the term. The sticking point is that these fees are outlined in mortgage contracts, and the lenders have the right to increase them.

However, it is the size of this increase – often a jump from £50 to £295 – that the FSA has deemed unfair; as well as the fact that many lenders don't inform borrowers of the fee increase until they are forced to pay it.
 
Generally, customers who make such a claim are likely to receive a refund of the difference between the fee paid and the fee written in the original mortgage agreement.

5. Motor insurance

Motor insurance complaints that reach the Ombudsman stage are falling, and dropped to 5,488 from 6,654 this year. An ongoing problem for drivers in this area is claims that are rejected due to non-disclosure – that is, failing to mention vital information that could make your policy invalid.

This includes driving convictions, previous claims, vehicle modifications and unnamed drivers. Yet the tricky issue is whether the non-disclosure was 'reckless' or 'inadvertent' – terms used by the Ombudsman when investigating such complaints.
 
If your claim was rejected due to what you believe to be unintentional non-disclosure on your part, it is likely you have a case to appeal the rejection. You won't be so lucky if you purposely tried to keep your motoring history from your insurer.

The Ombudsman told us that other common grievances are regarding administration and customer service issues, valuations and the quality of repairs following an accident. The Ombudsman upheld around half of all car and motorcycle insurance claims this year.

6. Mortgage endowments

The time limit set by the FSA for complaints regarding shortfalls in mortgage endowment policies is running out for an increasing number of consumers, which is why the amount of complaints to the Ombudsman fell from 8,385 to 5,450 last year – and only 37% were upheld.

This issue stems from some endowment policies taken out with mortgages in the 1980s and 1990s that are not expected to pay out the amounts originally estimated.

If you received a 're-projection' letter from your endowment company warning of a shortfall, and that your policy may not grow sufficiently to clear the loan at the end of your mortgage – this in itself isn't cause for complaint. It is possible, however, to complain about the advice you were given when taking out the endowment.
 
If for example, the nature of the policy was not clearly explained to you and you were not informed that due to being linked to the stockmarket, the value could go down as well as up, you may have a case. But, your endowment company will have issued a 'final date' for complaints and if this has passed you are too late to complain, to both the firm and the Ombudsman.
 
If you're within the time limit, first complain in writing to the endowment company. If, after eight weeks, you're unhappy with its decision or it has not made one, take the issue to the Ombudsman by filling in a complaint form and mortgage endowment questionnaire, available at financial-ombudsman.org.uk.

7. Overdrafts and loans

Problems regarding breached agreed overdraft limits and missed personal loan repayments have soared within the past year, as customers increasingly face financial difficulties and struggle to repay these unsecured debts.

The Ombudsman received 5,408 overdraft and loan complaints this year, up from 3,490 in 2008/2007. Although in these situations the consumer is often in the wrong due to poor money management, grievances tend to arise as a result of how these issues are dealt with – again poor administration raises its ugly head.

A number of these complaints are also related to loan consolidation, as consumers attempt to reduce their outgoings by combining debts within a single loan. The Ombudsman upheld 49% of complaints last year.

8. Savings accounts

Many of us have grumbles with savings accounts, particularly at the moment with interest rates so disheartening, but a large proportion of problems stem from not taking the time to read and understand the small print when we open an account.

The Ombudsman receives a great deal of complaints regarding unusual or unexpected account terms. Some of the highest paying accounts are those with the strictest terms. These might include a bonus rate that ends after a set period; restrictions on the number of withdrawals you can make, or that regular contributions are required to earn the headline interest rate.

But if these terms and conditions were explained in the paperwork, your complaint will fall on deaf ears.

Many consumers experience frustrating administration issues when trying to open or close an account; such issues are the basis of many savings accounts complaints received by the Ombudsman. It received 4,623 complaints last year, and upheld 64% of these.

9. Pensions

Two bodies are responsible for investigating complaints regarding pensions – the Ombudsman and the Pensions Ombudsman. Issues surrounding the sales and marketing of pension schemes are dealt with by the Ombudsman, while the Pensions Ombudsman investigates complaints and disputes about the way schemes are run.
 
The number of pension complaints received by the Ombudsman fell by around 40% to 3,937 last year and it upheld 23% of claims. Most of the complaints centred around sales, advice and the level of risk investors were  encouraged to take.

If you have a complaint relating to a personal pension, or against an employer or administrator of an occupational pension scheme, both the Ombudsman and the Pensions Ombudsman expect you to have raised the issue in writing with the provider first. Only if you aren't able to resolve matters will the two organisations consider stepping in.

10. Buildings insurance

The Ombudsman received 3,362 complaints about buildings insurance last year, up from 3,114 in 2008/2007, and upheld 44%.

Issues are wide-ranging, from how insurance companies deal with damage claims to property caused by flooding, storms or fire – such as rejection of claims or delays in sorting them out – through to quality of repairs and subsidence claims, which are particularly complex as the problem can develop over many years.

As with motor insurance, rejection of claims on non-disclosure grounds is the source of many complaints and exclusions and conditions that are often overlooked in the small print.

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• endowment mortgages
• PPI
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