The banking industry attracted more than 1.25 million complaints in the first half of 2010 alone. The consumer watchdog found that despite being dissatisfied with the initial response from their bank, less than a third (31%) of people then pursue the complaint further. Of these people just 9% take their complaint to the Financial Ombudsman Service. This is despite evidence suggesting that if consumers do pursue their complaint they can receive a better result than they might expect.
Research on consumers who have used the Ombudsman service shows that nearly three-quarters feel it provides a "fast and efficient service" and that consumers receive compensation in half of the cases it reviews.
Consumer Focus is calling for banks to take complaints more seriously and devote more resources to improving customer service. The consumer champion is also urging the Financial Services Authority to continue using the prospect of financial sanctions to keep the pressure on poorly performing firms. The FSA previously concluded that banks' complaints handling is ‘poor' with more than a third underperforming in this area.
Commenting, Oliver Morgans, financial services expert at Consumer Focus, said: “Customers are willing and able to fight their corner and take the first step of complaining. The problem is they then seem to become disheartened by the banks' poor service and complaints systems. Unfortunately, persistence appears to be the key to getting the answer you would like from your bank.
“These findings should be a wake-up call for banks who must do more to improve their complaint handling practices. Decent customer service is a necessary part of a healthy market and a successful company. The evidence suggests banks are currently falling a long way short.”
Consumer Focus thinks that poor customer service and complaints handling is a sign of weak competition. Banks should be using good customer service as one way to differentiate themselves from their competitors, to attract and keep customers and to learn more about how they are performing. Consumer Focus analysis of complaints data from the banks and the Ombudsman shows significant differences on customer service, with some banks performing much better than others.