Every year, thousands of complaints are made to the Financial Ombudsman service and a lot of these are because of issues with how a benefit or insurance policy was sold to them by the bank.
Most people have heard about PPI mis-selling, with many already having claimed millions in compensation. Packaged Bank Accounts are another area where people have felt pressured into taking out an account with benefits that either weren’t relevant for their circumstances or that they weren’t made fully aware of.
We’ve taken a look through the Financial Ombudsman Service’s 2016 report to see exactly how high the proportion of people claiming as a result of mis-selling is and why.
According to the Financial Ombudsman Service, 99% of all enquiries made about PPI were in reference to ‘sales and advice’, meaning that they weren’t given sufficient advice before signing up to the benefit.
In investment and pensions, 59% of complaints in this area were for ‘sales and advice’ and this number was pretty similar in banking and credit, with 53% of complaints about ‘sales and advice’. Sales and advice was one of the four categories that complaints made to the Financial Ombudsman are listed under, showing what a significant problem it is for them.
According to the Financial Ombudsman, complaints about Packaged Bank Accounts doubled on the previous year. In the year up to March 31st in 2015 21,348 claims were made, while in the same time period to the 31st of March 2016, a staggering 44,244 people complained about Packaged Bank Accounts.
Increased media attention about Packaged Bank Accounts and the ways you could have been mis-sold one have led more people to investigate whether the benefits included are right for them.
The issue with mis-selling
In their annual report released in May, the Financial Ombudsman explained that across insurance and banking benefits, the main issue they see is a lack of communication between the companies, whether that’s a bank or insurer, and their customers.
Miscommunication has been found in how the benefits are sold in, the paperwork and other administration when signing up and also with how claims are dealt with should an incident arise. With all of these stages, it seems that the biggest fault is with how terms and conditions were explained to the customer and understood at every part of the process.
When complaints about mis-selling have been made, banks have said that customers failed to mention conditions which would make them ineligible for certain insurance policies. However, the Ombudsman often rule these objections out because insurance companies and banks have to ask the right questions in order to obtain all the information they need.
Communication is key, many of the complaints made to the Financial Ombudsman are found to be an issue with jargon, where bank terminology has intimidated customers who believed they were getting an upgrade but were afraid to ask for full details.
Mis-selling has upset a lot of people, who have rightly got their money back. If you think you’ve also been sold an account or insurance policy that isn’t right for you, it’s worth investigating.