Financial Ombudsman Service news

The Financial Ombudsman Service could face a funding crisis unless the City watchdog, the Financial Services Authority, this week approves measures that will enable it to raise cash.

The FOS crunch arises from complaints over payment protection insurance, the loan cover sold by banks.

Claims farmers – companies offering to pursue compensation claims on behalf of consumers on a no win, no fee basis – have begun approaching homeowners who believe they have been mis-sold mortgages.

The Financial Services Authority has been conducting a clampdown on irresponsible lending and last week confirmed it was investigating a second firm over questionable mortgage lending practices following last month's £840,000 fine of DB Mortgages, part of the Deutsche Bank Group.

The FSA, the Financial Ombudsman Service and the Office of Fair Trading have formed a joint committee to spot emerging risks that could cause widespread consumer detriment.

The Coordination Committee was first proposed in an FSA discussion paper on consumer complaints published last March.

Lloyds Banking Group has pledged to cut customer complaints by a fifth as part of a drive to improve service laid out by its new boss.

The part-nationalised bank was the most complained-about financial institution in the second half of 2010 - receiving 22,181 complaints during the period, according to recent figures from the Financial Ombudsman Service.

Lloyds said it received 2.1 complaints per 1,000 customers in 2010, but aims to cut this by 20% in the first half of 2011 under targets announced by new chief executive Antonio Horta-Osorio.

The Royal Bank of Scotland (RBS) received over 40% more customer complaints in the second half of 2010 than it did in the first six months, data released by the Financial Services Authority (FSA) today revealed.

Jessica Gorst-Williams in The Telegraph writes: "Several readers have expressed disquiet about the time it is taking to navigate some complaints through the FOS. A few report waits of more than two years.

The Financial Services Authority's (FSA) complaints data showed Aviva fielded over 7,000 life and pensions complaints in the past six months, more than any other provider in the sector.

Towry received over 2,000 complaints in the second half of last year, with 97 per cent of complaints upheld over the same period.

The bulk of Towry’s complaint figures between July 1 and December 31 relate to its takeover of Edward Jones, with 1,301 new complaints received by Towry Edward Jones and 766 received by Towry Investment Management.

Overall Towry received a total of 2,067 complaints over the six month period.

London Capital Group hopes to raise £8 million through a rights issue to cover capital adequacy costs. The rights issue follows a £3.2 million Financial Ombudsman Services (FOS) bill relating to complaints about Integrity Financial Solutions managed currency accounts.

New complaints in the last six months of 2010 increased by 15% compared to the first, some 97,237 in total. According to industry sources this figure is likely increase with retrospective claims as banks are forced to apply route cause analysis to all of the Payment Protection Insurance policies they have sold since 14 January 2005 and compensate customers accordingly.