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Mortgage complaints up 13% as FOS tells banks not to scapegoat customers for fraud

  • 22/08/2018
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Mortgage complaints up 13% as FOS tells banks not to scapegoat customers for fraud
Mortgage complaints logged with the Financial Ombudsman Service (FOS) rose by 13% between April and June compared to the same period last year.


The regulator registered 2,628 new cases in the first quarter of the 2018/19 financial year, up from 2,309 in Q1 last year.

Enquiries received by the FOS regarding mortgage products also rose by 10% to 3,456, however the number of cases passed to an ombudsman to adjudicate on fell 31% to 401 in the three months.

The proportion of these cases awarded to the complainant also rose to 27% of cases – up from 24% in the same period last year.

Mortgages were the seventh most complained about sector according to the FOS data, but accounted for the fifth biggest case load needing an ombudsman decision.

However, Payment Protection Insurance (PPI) continued to provide the bulk of the FOS work with 75,966 enquiries, 55,223 new cases logged and 4,964 ombudsman decisions.



Don’t blame customers

The FOS used the publication of its quarterly data to warn banks not to simply blame customers for being “grossly negligent” when fraud occurs.

It noted that banks regularly said consumers who have been scammed had acted with gross negligence and therefore banks were not liable for the money their customer had lost.

However, the ombudsman said there is a very high bar for being grossly negligent which is far more than just being careless.

“This is because of the increasingly sophisticated scams which fraudsters are using that are becoming even more difficult for consumers to spot,” it said.

“In pretending to be a consumer’s bank or other entity so they can obtain personal details, fraudsters are increasingly abusing technology to their advantage.”

Financial Ombudsman Service chief executive and chief ombudsman Caroline Wayman said it was not fair to automatically call a customer grossly negligent simply because they had fallen for a scam.

“That’s especially true in light of the sophisticated way criminals exploit banks’ security systems – and convince customers that their money is at risk,” she said.

“We often remind banks that they need to support what they’re saying with facts. And if they can’t do that, it’s likely we’ll tell them to cover the money their customer has lost.”


Gentleman’s club

Alongside its warning, the FOS published details of five case studies where account holders claimed they had been victims of fraud but their banks had refused to refund them, claiming they had been grossly negligent.

One included a disputed bank transaction for drinks at a “gentleman’s club” worth €1,400 which the FOS believed had actually happened and rejected the claim.

Others included victims of a text message scam, a fake website and SIM swap, and disputed cash withdrawals, which were upheld.



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