According to the latest figures from the FCA, home finance complaints came to 101,332 in H2 2022, but fell to 91,470 in H1 2023.

The segment covers equity release, impaired credit, other regulated home finance products, other unregulated home finance products and second and subsequent charge.

Other regulated home finance products was the largest complaints segment at 70,387, which is down from 78,418 in the second half of 2022.

This was followed by other unregulated home finance products at 19,120, an increase from 17,398 in H2 2022.

Complaints around second and subsequent charge took third position at 2,650 in the second half of 2023, a rise from 2,250 in the same period the year before.

Equity release accounted for 1,951 complaints, a drop from 2,674 in the second half of 2022.

Impaired credit made up 714 complaints, which is a fall from 592 in the same period the year before.

1.87 million complaints in financial services overall

The report stated that the number of complaints per 1,000 products sold came to 7.27 in H2 2023, a slight increase on 6.75 in H1 2023 and 6.83 in H2 2022.

In financial services overall, the FCA received 1.87 million complaints, a 1% fall from the prior period.

Home finance is one of three product groups that experienced a rise in complaint numbers, along with banking and credit cards and investments.

The percentage of complaints upheld decreased from 61% in 2023 in H1 2023 to 58% in H2 2023.

I like trying new places and, let’s be honest, it’s quite fun doing the research and looking at different destinations, hotels, and restaurants. For most of the weekend, I was on various online websites assessing feedback, reading reviews and honing my options accordingly. 

Now, I know I work for a business that provides online reviews solely for the financial services sector, but it’s clear they shape our buying decisions across almost all parts of our lives. In fact, our research shows that 84 per cent of customers trust reviews from other customers*. Therefore, in this article, I’ll give four key reasons why online reviews matter. 

Influencing purchasing decisions 

Most customers read reviews before making a purchase or using a service. And our research found that 69 per cent of customers are likely to change their mind after reading reviews*. I know I did with one particular hotel this weekend. This demonstrates the importance of reviews and having a strong online reputation. 

Providing valuable feedback 

Online reviews give companies feedback from customers. Positive reviews show what they’re doing well, while negative reviews show areas for improvement. This feedback helps them to make changes and improve products, services and customer experience. 

Building brand awareness 

Online reviews can help companies become more well-known, boost visibility and attract new customers. When customers leave reviews on platforms like Smart Money People, they showcase the company to others. Responding to reviews also helps companies improve their image and build stronger customer relationships.

Addressing customer concerns 

When a customer leaves a negative review, it’s essential for companies to respond quickly. This shows that they value their customers and want to learn and get better. Companies can improve their service and increase customer loyalty by addressing negative reviews and resolving issues. At Smart Money People, for example, we notify companies when a customer leaves a review, so they can respond quickly. 

From building trust and credibility to influencing purchase decisions and providing valuable feedback, the importance of reviews is clear to see. Companies should manage and respond to reviews, positive and negative, to maintain a strong online reputation and attract and retain customers. 

*Smart Money People research, 2022 

The Financial Ombudsman Service (FOS) said that these issues included unaffordable lending, travel and motor insurance, and fraud and scam cases.

For instance, the FOS said that there will be a “continued rise in disputed transactions” fueled by a growing volume of financial fraud and scams.

It added that cost of living pressures would lead to a “rise in irresponsible and unaffordable lending complaints”.

The FOS continued that there could also be an increase in account closure complaints due to improved higher public awareness, motor insurance complaints would remain at a high levels alongside complaints about car finance commission arrangements.

The predictions are part of a consultation, which is open until 30 January.

The complaint resolution body said that it was aiming to resolve 90 per cent of cases within five months, which built on progress it had already made.

It is also looking at lowering the cost of the service to the industry in the year ahead, reducing the case fee by £100 per case to £650 and cutting its compulsory and voluntary jurisdiction levies.

The latter would lead to an effective £60m reduction in case fee and levy costs to the business.

The FOS is also seeking feedback on proposed charges for professional representatives for bringing cases to the FOS on whether and how this should be implemented, the level of fee, impact on complaint volumes, impact on different complaint groups and lead time needed.

Financial Ombudsman Service: ‘Looking to resolve complaints more quickly’

Abby Thomas, chief executive and chief ombudsman of the FOS, said: “Given cost of living pressures it’s imperative that, now more than ever, consumers understand their finances and are treated fairly and transparently by financial service providers.

“Looking ahead, we know our service will see a high level of complaints and that those disputes will likely focus on the critical issues that impact people’s everyday lives. This includes perceived unaffordable lending, mortgages and complaints about people’s savings and current accounts.

“We are planning to be more ambitious next year, resolving complaints more quickly and improving the service we offer. At a time when all businesses are facing financial pressures, we are also reducing the cost of our service to industry.”

However, when it comes to new regulations, we are always looking for early precedents which might give us a hint of what behaviour the regulator is seeing, what it doesn’t like, and how it is going to deal with this. Towards the end of last year, FCA chief executive Nikhil Rathi, spoke before the Treasury Select Committee and perhaps provided some solace to regulated firms by suggesting the regulator will take a “proportionate” approach when it comes to Consumer Duty adherence.

He said: “We won’t seek to enforce every technical breach of Consumer Duty. We are going to go after the most egregious harms, to allow the Duty to settle in.”

From my perspective, that seems like a very sensible approach, especially given Consumer Duty rules needed to be introduced by firms during an incredibly challenging year, and as always, turning theory into practical applications can take time.

However, as we know, when it comes to consumer/client complaints, it is not the FCA who are judge and jury, but the Financial Ombudsman Service (FOS).

Now, for anyone thinking there may be some disconnect between the FCA and FOS, given their independence from each other, they should quickly quash that notion as the two bodies have worked, and will continue to work, closely with each other as they did on the introduction of sector-specific directorates to cover particular areas of financial services.

As an industry, mortgage/protection advisers tend to receive a relatively low level of complaints from clients about their work, but we can’t deny that complaints are received and must be treated with diligence and care.

Indeed, as a network, part of our job is to not only highlight the potential areas where complaints might emanate from, but to deal with any root causes before issues might arise. That seems like an increasingly important aspect of our ‘service’ to AR firms.

Using tech to spot poor advice in a Consumer Duty world

It’s why we use both technology, via Revolution, and human interaction to spot potentially poor advice, and it also gives us the opportunity to question whether the right customer outcome is delivered and to identify questionable adviser behaviour.

That allows us to intervene, raise any concerns with the adviser, and to make sure they don’t continue down a road which might inadvertently deliver a sub-optimal outcome for the consumer and could ultimately lead to complaints.

We’ve also recently issued a complaints-related communication to all our members which outlines recent industry complaint trends, tips on how to deliver exceptional consumer outcomes, and insights from the FOS itself.

Identifying trends can be an important part of ensuring complaints don’t arise and to also learn from mistakes. So, whether it’s the provision of inaccurate data to a lender or provider, or poor communication with the client, or not returning documents efficiently, or AIPs/DIPs submitted without evidence of the awareness of a client or consent, these issues can all be rectified quickly, but it’s clearly better not to have taken place in the first place.

We should not forget that every complaint investigated by FOS currently costs a firm £750 regardless of the outcome. Ensuring issues do not reach that stage and doing everything to resolve a complaint, such as mediation, is highly important, not just financially but what it could mean for an adviser/firm if FOS eventually find in favour of the complainant.

In that vein, advisers who are clearly in the wrong, should have no issue in admitting to this in a professional manner and at the earliest stage possible. When we see mistakes or errors which are obvious then it makes absolute sense to hold your hands up, rectify them and compensate the client. Overall, therefore, while we continue to bed in the Consumer Duty rules and while the market awaits details of the action, the FCA may take against those who fail to comply, it’s important to recognise where complaints might be generated from, how to mitigate the risk, but also how to deal with them should one land on the desk.

Part of providing a positive consumer outcome inevitably means dealing with a complaint professionally and amicably; complaints in life and business are inevitable to some extent – it’s how you deal (and learn) from them that will mark you out.

According to the latest half-year figures, the highest number of complaints in this category were made against Barclays Bank UK with 739 new cases, Bank of Scotland taking second position with 524 new cases and Santander receiving 418 new cases in this category.

Rounding out the top 10 were Natwest with 274, Nationwide with 251, HSBC with 215, Lloyds Bank with 178, Clydesdale Bank with 171, Topaz Finance with 104 and The Mortgage Works with 91.

Within the new mortgage and home finance complaints there were 52 companies mentioned.

The data also noted that the average percentage of upheld cases for the mortgage and home finance segment was 28 per cent, which is lower than the overall average of 37 per cent.

The mortgage and home finance figure are in line with the same period last year which came to 27 per cent.

Overall, the FOS said that it received a total of 93,114 complaints between January and June this year, an increase from 72,978 in the same period in 2022.

This also includes complaints about financial businesses that fall below the publication threshold of 30 new and 30 resolved complaints.

The consumer watchdog attributed the increase to a jump in building and motor insurance complaints, which hit a five-year high last month due to insurers delaying claim pay outs with contractor availability impacting the speed of repairs.

It added that banking and credit complaints had grown significantly, with fraud and scam cases making up approximately half of the increase.

There were 245 businesses featured in the complaint data, up from 212 businesses in the first half of last year.

The FOS said it had upheld 37 per cent of complaints in the consumer’s favour, in-line with the same period last year.

Abby Thomas, chief executive and chief ombudsman at the FOS, said: “Financial complaints have risen again, with cases particularly increasing in the banking and insurance sectors.

“Given the economic challenges people are facing, it’s more important than ever that they feel protected. Whatever their grievance, consumers should expect fair and reasonable treatment from their provider.”

She added: “If consumers don’t feel that’s the case, they can ask our free, independent service to investigate their complaint.”

Between April and June this year, the Financial Ombudsman Service (FOS) received 1,776 relating to buildings insurance.

When combined with motor insurance complaints (which received 3,869 complaints), this is the highest number of insurance complaints seen by the FOS in five years. It says the increase has been caused by several factors including a rise in insurers delaying paying out claims. A squeeze on the number of contractors available to carry out repairs and also problems with sourcing materials were also to blame.

Abby Thomas, chief executive and chief ombudsman at the Financial Ombudsman Service, said: “Where these complaints are driven by insurers delaying paying out on claims that’s unacceptable. We expect insurers – as well as other businesses – to treat their customers fairly and in a timely manner.

“If consumers don’t feel they’ve been treated fairly by a financial business, they should contact our free, independent service and we’ll investigate their complaint.”

Current accounts most complained about

The highest number of complaints to the FOS in the first quarter were to do with current accounts. It received 7,224 complaints, and the majority of these were to do with fraud and scams. Of all current account complaints, 5 per cent were to do with account closures.

Complaints about frauds and scams across all financial products rose by almost 39 per cent to 6,094, from 4,398 a year ago. The FOS said it upheld almost half of these in the consumer’s favour. Around half of these were related to authorised push payment (APP) scams.

Overall, the total number of complaints received in the quarter was 43,953, up from 35,029 the previous year, and 37 per cent were upheld compared to 34 per cent a year ago.

‘Concerned’ by the figures

A spokesperson for the Association of British Insurers (ABI) said: “We’re concerned to see these latest complaints figures from the Financial Ombudsman Service.

“Insurers work hard to process claims as quickly and efficiently as possible whilst managing challenges beyond their control that can impact on timings.. However, clear and timely communication is vital to support the customer throughout any claim.

“We’ll work with our members and the FOS to understand where improvements can be made, in particular any learnings from the complaints that have been upheld.”

For instance, would we be having conversations about product withdrawal timescales, a Mortgage Charter, first-time buyer affordability or buy-to-let landlords selling up in greater numbers, were it not for the dominance of recent and significant rate movements?  

In that sense, it becomes ever more important for advisers to ensure they protect themselves from the potential consequences of advising within a rapidly-changing rate environment.  

There’s no doubting, and some firms may already be experiencing this, that consumer dissatisfaction attributable to rate availability and rate recommendation is likely to increase, and with it, the value attributed to any complaints if subsequently deemed to be valid.  

The trouble here of course is that many expressions of dissatisfaction are sometimes based on the unfair assumption advisers should be able to give advice with the benefit of hindsight.  

That, of course, is impossible but it won’t necessarily prevent a complaint being raised in months or years to come which argues that, for instance, the two-year fixed-rate recommendation accepted by a client in 2021 is now questionable advice.  

No crystal ball 

Clearly, an adviser cannot have foreseen the client would be remortgaging in an environment where product pricing is significantly more expensive than at the time of the original advice. 

A point which the industry needs to consider carefully is the possibility of heightened dissatisfaction, or complaints, emanating from the impact of rate rises on personal finances: which is unlikely to suggest a case of ‘bad advice’. 

Advisers must ensure their record-keeping covers off every interaction and makes clear the understanding they had at the time of advice about what the client was being recommended, why they were recommended this product, and their acceptance of that advice. 

One of the key elements of a strong network proposition is advice standards policy and processes, plus the technology that enables it.  

A changing client-broker relationship 

What is also interesting in this context is the changing rate environment and the experience of advisers operating in today’s market, and how that might shift the depth and extent of conversations with clients. 

I suspect many advisers when dealing with clients coming to the end of their deals, up until recently, have regularly been able to demonstrate a healthy monthly cost-saving. That is, they have always had the ability to secure clients a reduction in their monthly mortgage amount resulting from falling or static rates in a competitive environment. 

That – unfortunately – is clearly not the case for large swathes of borrowers today, and this is a conversation which is more difficult to have, and which requires a different tone and a greater level of explanation. 

We talk a lot in this sector about ‘soft skills’ and advisers are likely to need these in abundance, particularly those practitioners who have not worked in such a volatile and fast-paced rate environment before.  

Let’s be honest, the market could not be more different now to what has been the prevailing one for the last decade or so, and that will take some getting used to for both advisers and clients. 

One final positive to leave on however – and we should recognise that one swallow does not make a summer – but we have seen swap rates coming off highs and we’ve seen a number of lenders cutting rates in recent weeks. I’ve even seen headlines suggesting a ‘price war’ although that might be slightly fanciful.  

It’s important that, given the current situation, we understand rate movements do not necessarily have to be inexorably upwards and, as a result, we could see the benefits of this in mortgage product pricing following suit, with some further reductions in the weeks and months to come.  

Good news for our consumers. 

According to the FCA’s annual report, there were around 35,000 ARs, including introducer ARs (IAR) in 2022 and 2023, which is down from 43,000 in 2020.

The regulator added that its supervisory interventions last year and in March this year had seen principals terminating relationships with 153 ARs and 618 IARs.

“While complaints for both 2021 and 2022 show an improved position for principal firms, compared to the published baseline, principal firms and their ARs still generate more complaints than non-principal firms overall,” it added.

The regime was introduced in 2022 and included rules around increased oversight, risk monitoring, information submission and review.

In its report at the time, the regulator estimated that the changes to the AR regime would cost all principal firms around £7.6m, and £2.7m for all large principal firms.

The FCA added that over half of principal firms surveyed for its practitioner panel survey thought that oversight of AR firms had improved.

It added that improving principals’ understanding of their obligations is central to its strategy and it had written to over 3,000 principals on the new rules.

The regulator has also collected new and comprehensive data covering the 35,000-strong sector, including data on business, revenue, complaints, reasons for appointment and financial arrangements between principals and ARs.

Lifetime mortgages

The report also confirmed that it was following up on its findings of “poor advice” in the lifetime mortgage market.

It explained that later life lending advice was “significant” and could have a “potentially lifelong impact for customers”.

The findings, which came out in 2020, were “mixed” with lifetime mortgages working well in some instances. However, the regulator identified cases where it was “not clear that the advice was in the best interests of the consumer”.

The three areas of concern were insufficient personalisation of advice, insufficient challenging of customer assumptions and lack of evidence to support the suitability of advice.

The FCA said: “We are assessing the quality of advice consumers get from a sample of firms. We will intervene to drive up standards.”

Jencap Partners’ managing director said the number of mortgage complaints and claims would “inevitably increase, regardless of whether they have merit”.

A presentation from Danny Belton, head of lender relationships at Legal and General Mortgage Club, at the London Institute of Banking and Finance (LIBF) mortgage conference noting that brokers could be the biggest threat to themselves proved popular amongst readers.

Expectations around the base rate and mortgage pricing also piqued reader interest, as well as rate changes at HSBC, The Mortgage Works and Santander.

Average mortgage rates continue to fall with largest cuts at high LTV tiers – Rightmove

Warning of rise in complaints around two-year fixed rate mortgages

HSBC brings out cashback remortgage deals and cuts rates

TMW slashes BTL rates by up to 0.5 per cent

Base rate to fall by winter – EY Item Club

BTL 2023: ‘Inevitable’ that buy-to-let cases will become more complex

The biggest threat to mortgage brokers is themselves – Belton

Santander reduces BTL and remortgage rates

Nearly 150,000 landlords retire from the market with more expected

The ‘broken’ housing market must be removed from government’s hands – Bamford

This follows a consultation regarding its complaints process where it found that within a five-month temporary initiative held in 2021 to reduce its backlog, 100 financial firms made 7,000 offers to customers to settle complaints. 

The FOS said: “This had a substantial impact on our queue, eased operational pressures at businesses, and helped complainants get fair answers quicker – including over 2,000 victims of scams who were reimbursed the money they lost.” 

The consultation after this initiative revealed that firms thought this change should be permanent. 

For the financial year 2023/2024, the FOS will introduce the proactively settled category for firms that make an offer to settle a complaint within 14 days. The body will review the offer to make sure it is “fair and reasonable” before sharing it with the complainant. Otherwise, the complaint will be investigated under normal procedures. 

If the offer is accepted, the complaint will be closed and categorised as proactively settled, if it is not then the FOS will investigate as normal. 

If the complaint is reviewed and the firm’s offer to settle is considered to be fair and reasonable and forms part of the resolution, the case will be categorised as proactively settled. 

This change will apply to cases from 1 April 2023 until 31 March 2024.