More complaints were made about Barclays than any other banking brand by UK customers in the first half of the year, figures have shown. The bank received 251,563 complaints, with 53% of closed cases upheld in customers’ favour, the Financial Services Authority (FSA) figures show.

Barclays said it had cut complaints by 14% compared with a year earlier. Other brands high on the list included Lloyds TSB (181,907), Santander (168,888) and NatWest (147,109). The data pulls together figures released in recent weeks by banks.

Nearly 10,000 complaints were filed every day to financial institutions, with a total of 1.85 million made in the first six months of the year. The FSA figures showed that, among the most complained-about banking brands, Santander was the most likely of the major brands to deal with cases within eight weeks; it closed 98% of cases within that time frame. This compared with 74% at Royal Bank of Scotland, 77% at Lloyds TSB, 86% at NatWest, 89% at Barclays and 90% at HSBC. Complaints were dominated by those about payment protection insurance (PPI), especially after banks lost their legal challenge on PPI rules in April.

PPI is supposed to cover borrowers’ loan repayments if they fall ill, die, or lose their jobs, but mis-selling cases led to new rules on how cases should be dealt with, and also created an extra compensation bill running into billions of pounds for the banks.

Adam Scorer, of watchdog Consumer Focus, said: “This issue continues to dog the financial sector and is a big test of its commitment to treating consumers fairly.

“All firms need to deal with outstanding cases and make sure everyone affected is treated efficiently and fairly.”

Complaints about banking, rather than insurance and some other categories, fell by 22% compared with the same period a year earlier.

The FSA’s complaints figures are published relating to banking brands. Barclays headed the list but said the number of complaints had fallen by 14% compared with the same period a year earlier.

“We want to get it right every time. When we do get it wrong, we apologise, try to correct it quickly and identify how to prevent it from reoccurring,” said Antony Jenkins, chief executive of Barclays Retail and Business Banking.

“We have made good progress in reducing complaints with a substantial and sustainable reduction in banking complaints by nearly a third.

“However, there is much more to be done and we are working hard to further improve our service to our customers, putting them at the heart of our business and getting it right first time, every time.”

The largest group, Lloyds Banking Group, had most complaints when all its brands were added together. Some complaints that are unresolved by the banks themselves end up with the independent Financial Ombudsman Service. It recently said that the largest number of these complaints in the first half of the year also related to Lloyds Banking Group, as well as nearly two-thirds of the new complaints made in the six months to the end of June being about PPI.

Consumers mis-sold payment protection insurance (PPI) have received £215m of compensation this year, according to the Financial Services Authority (FSA).

The cash was paid out by 16 unnamed firms, representing 92% of PPI complaints made between January and June this year; the payouts follow the dismissal by the High Court of the banks’ challenge to the PPI compensation rules in April. In May and June alone, £102m was paid out to customers.

The monthly totals for the first six months of the year were: £29m in January, £31m in February, £28m in March, £25m in April, £37m in May, and £65m in June.

A string of High Street banks have set aside cash to settle PPI complaints: Lloyds’ £3.2bn PPI compensation bill is the largest of any UK bank. Barclays is setting aside £1bn, RBS £850m and HSBC £269m. The figures released by the FSA also included payments made after rulings by the Financial Ombudsman. The independent body, which rules on financial cases not settled by banks, has revealed it has received more than a quarter of a million PPI complaints in total, with a record 104,597 received in the last financial year.

It said it had upheld three out of four complaints, with an average payout of £2,750. Margaret Cole, interim managing director of the FSA’s conduct business unit said: “The treatment of PPI complainants has left an indelible stain on the financial industry’s record.

“We remain 100% committed to ensuring that where consumers were mis-sold PPI they will receive the appropriate redress from firms, and we are monitoring firms’ progress to ensure this is done properly.”

The spectre of the biggest financial mis-selling scandal in the industry’s history doesn’t look like it’s going away any time soon.

Millions of customers have now realised that for years, banks have made a killing from selling expensive Payment Protection Insurance to people taking out loans – whether or not it was appropriate. It became so profitable for banks to sell PPI – which will cover your repayments for a year in the event of an accident, sickness or unemployment – that many customers ended up paying for it without even realising. Others were sold insurance they didn’t need or couldn’t use, but which still ended up costing them thousands of pounds. Now the regulators have woken up to this scandal, which dates right back into the 1990s, and the banks were forced to put aside billions of pounds to cover the cost of compensation to thousands of customers after abandoning a legal challenge in the High Court.

Earlier this year, Streetwise provided readers with a checklist to help them work out whether they have been on the receiving end of this gross mis-selling, but we are still receiving calls from those of you who aren’t happy, and the latest figures from the Financial Services Authority show that in many cases the industry is failing in its attempts to resolve people’s complaints.

Independent consumer watchdog Which? has led the fight for compensation for those affected, but executive director Richard Lloyd says banks still aren’t treating customers fairly. He says: ‘If the next round of complaints data doesn’t show a dramatic improvement then the FSA must take tough enforcement action against banks whose complaints handling isn’t up to scratch. To ensure that consumers get the redress they deserve the FSA must make sure that all major banking groups are required to review the PPI complaints they previously rejected unfairly. Even if you take PPI out of the equation, these figures point to the blasé attitude banks seem to have towards their customers.

‘In a properly functioning market, banks wouldn’t be able to get away with treating customers like this.’

The figures show what percentage of complaints the regulator resolved in favour of the customer, because the bank was not willing to take sufficient action. Of the big four retail banks, Lloyds TSB has the worst complaint record, with 84 per cent over the last six months being settled against them. Royal Bank of Scotland and Barclays occupy the middle ground, with scores of 55 per cent and 52 per cent respectively. But far ahead of the others – for this period at least – is HSBC, with a much more respectable 18 per cent of cases ruled against it.

Natalie Ceeney, chief executive of the FSA, puts the statistics into context when she says: ‘These latest figures show a significant increase in the number of new PPI complaints referred to the ombudsman during the first half of 2011. This period coincided with the time when most of the high street banks and some other financial businesses had put PPI complaints on hold, because of their legal challenge against the ombudsman service and FSA.’

And News consumer rights expert Richard Thomson echoes the view of Which? that banks aren’t doing enough to sort the problem out. He said: ‘The banks have been lumped with hefty fines by the regulator, withdrew from a High Court test case they had in the pipeline to try to avoid compensating consumers for mis-selling, and have been compelled to make provision of billions of pounds for compensation, which has dented their profits for last year.’

Complaints about the mis-selling of payment protection insurance have deluged the Financial Ombudsman Service (FOS).

The FOS, which deals with unresolved issues between customers and financial institutions, said it received 149,925 new complaints in the first half of the year; this was 54% more than in the previous six months. Nearly two-thirds of the new complaints, 98,632, were about PPI.

“This period coincided with the time when most of the High Street banks and some other financial businesses had put PPI complaints on hold, because of their legal challenge against the ombudsman service and Financial Services Authority,” said Natalie Ceeney, the chief ombudsman.

“As a result, complaints in this period about PPI were harder fought and harder to resolve – particularly if we found in favour of a consumer.”

In 47% of cases during the first half of the year, the ombudsman found in favour of the consumer. This compared with 53% in the second half of 2010. Four big banking groups and one credit card firm – Lloyds, Barclays, RBS, HSBC and MBNA – were each responsible for more than 10,000 complaints under all categories to reach the FOS; they contributed just under half of all the new complaints lodged in the first half of the year.

Lloyds Banking Group, the UK’s biggest, which includes the Bank of Scotland, was responsible for 37,696 complaints just on its own. MBNA was not the only credit card bank that failed to satisfy initial complainants who then sought to take their gripe to the ombudsman. Capital One and HFC also generated 10,000 PPI complaints between them. Santander generated the most general banking and lending complaints, at 4,035.

Oliver Morgans, of Consumer Focus, said the banks should be ashamed of their failure to deal with PPI complaints fairly.

“There has been a massive surge in complaints about this issue with some banks showing a totally unacceptable uphold rate,” he said.

“We expect the next set of FOS figures to show PPI complaints are being dealt with properly by banks without consumers needing to contact the Ombudsman,” he added.

Barclays Bank is expecting complaints about loan insurance to continue rising after a 93% increase in the first half of the year.The High Street bank said complaints about payment protection insurance (PPI) had soared after banks lost their legal challenge on PPI rules in April.

It received over 73,000 insurance complaints, mostly about PPI, up from 38,000 in the same period of 2010. Overall, Barclays saw a 14% drop in complaints about its services. “We expect PPI complaint volumes to be greater in the second half of 2011 as we see an increased number of complaints following the outcome of the judicial review,” said Barclays.
“Barclays is working hard to clear PPI complaints as quickly as possible; prioritising customers who were held up in the judicial review and resolving all complaints in a transparent and efficient manner.”

Recently, Lloyds said that insurance complaints it had received had more than doubled from 94,918 in the first six months of 2010 to 202,384 in the first half of 2011.
Barclays set £1bn aside earlier this year to meet PPI compensation costs and promised to compensate all customers who complained they had been mis-sold PPI before 20 April on a “no quibble” basis.

PPI is supposed to cover borrowers’ loan repayments if they fall ill, die, or lose their jobs, but it became highly controversial and there were years of campaigning by consumer groups against the widespread mis-selling of the policies. This prompted new rules which laid down how the banks should deal with past cases of potential mis-selling of PPI, which will lead to an extra compensation bill running into billions of pounds. A number of banks lost a High Court challenge against these rules in April.

Insurance complaints to Barclays, mostly about PPI, rose from 38,000 in the first six months of 2010, to 59,000 in the second half of last year. The latest figures showed these had risen again to 73,000 in the first half of 2011.

Santander UK has confirmed that pre-tax profits have halved compared with the same period a year earlier after putting aside £731m for compensating customers who were mis-sold payment protection insurance (PPI).

Its pre-tax profit for the six months to 30 June was £549m, down from £1.2bn a year earlier. Most of the UK’s largest banks are paying out PPI compensation with Lloyds Banking Group having set aside £3.2bn, Barclays £1bn, and RBS £850m.

Despite the large drop in the headline profit number, Santander UK said it was “maintaining its strong track record of profitability and strengthening its balance sheet”; Santander UK is the British arm of Spanish lender Banco Santander, whot bought Abbey National in 2004, Bradford & Bingley in 2008, and Alliance & Leicester in 2010.

PPI is supposed to cover loan repayments if someone becomes ill or loses their job. But it has emerged that many of the policies were mis-sold, either because people were not aware they were paying for the insurance or because they would not be covered.

In April, the banking industry lost its High Court challenge to new rules on the sale of PPI.

Among other things, the rules require sellers of PPI polices to review all their past sales to see if their customers have a claim for mis-selling, whether or not they have actually complained.

A courtroom defeat for banks over the mis-selling of payment protection (PPI) insurance resulted in a surge of new complaints, figures show.

The Financial Ombudsman Service has reported receiving an average of 900 PPI cases each working day in April, May and June. In April, the banking industry lost its High Court challenge to new rules on the sale of PPI; a month later, the British Bankers’ Association chose not to appeal. This ended the hold on tens of thousands of fresh PPI complaints that came in to banks and the process of compensation for those mis-sold PPI moved up a gear.

“During the period of that judicial review, our ability to progress cases against many banks and other financial businesses was seriously hampered, meaning that fewer cases than we had planned were resolved,” said principal ombudsman Tony Boorman.
PPI is supposed to cover loan repayments if someone becomes ill or jobless, but many of the policies sold by the banks were mis-sold. Figures released by the ombudsman show that there were 56,025 new complaints about PPI in the first quarter of the financial year. This accounted for 69% of all new complaints made to the ombudsman during that period. Some 55% was resolved in favour of the consumer. Banks have now set aside millions of pounds for compensation, and are attempting to clear a backlog of complaints.

Lloyds Banking Group set aside £3.2bn to cover the cost of this compensation, followed by Barclays (£1bn), RBS (£850m), Santander (£548m) and HSBC (£269m).
“It is difficult to tell whether we will be seeing still higher numbers [of complaints] yet, or whether the figures will now start to decline,” Mr Boorman said.

Next on the list was 5,500 disputes about credit card accounts, which made up just 7% of new complaints.

Two and three quarter million people could be refunded as much as £2.7bn for being mis-sold Payment Protection Insurance (PPI).

The Financial Services Authority (FSA) has given banks and other lenders until 1 December to adopt new rules for dealing with PPI complaints.

The FSA said that over five years it had found “wide and deep evidence of weaknesses in PPI sales”.
PPI insures people’s loan re-payments if they fall ill or lose their jobs.
The FSA expects its new rules to force the financial services industry to deal with about 550,000 complaints a year for the next five years.
Average compensation will vary from £900 for those who were mis-sold about regular-premium PPI policies to £1,800 for those mis-sold single-premium policies.
However, a law firm which advises financial companies on regulation said the rules had “no sense of proportionality”.
“Firms are receiving thousands of bogus complaints and their right to robustly defend those complaints is now being challenged by FSA,” said Paul Edmondson of CMS Cameron McKenna.

A long running campaign by consumer groups such as Citizens Advice and Which? has accused the sellers of PPI in engaging in a widespread “protection racket”.
They have accused lenders and others of selling the insurance alongside loans when it was unnecessary, without telling the borrower they were even paying for a policy, or of selling policies on which the borrower could not in fact claim.

The financial services industry has been engaged in a behind-the-scenes campaign to deter the regulator from bringing in the new sanctions, arguing that they are either unnecessary or disproportionate, but the FSA has finally decided to act.

“Today is the culmination of months of hard work and now, with these measures, we look forward to consumers being treated fairly whether they are buying or complaining about PPI,” said Dan Waters of the FSA.
“Since we took over the regulation of PPI we’ve carried out 24 investigations and three thematic reviews, issued warnings, halted the selling of single premium PPI with unsecured personal loans, visited over 200 firms, and handed out some very significant fines,” he added.
Greater mis-selling

There has been a dramatic increase in the number of PPI complaints in the past two to three years, alongside highly critical investigations by the Office of Fair Trading (OFT) and the Competition Commission.

However, the FSA explained that firms had been turning down almost half of the PPI complaints they received, and that some had rejected nearly all their complaints.

About 30% of those people had turned to the Financial Ombudsman Service (FOS) for help, where about 80% of the complaints were then upheld.

“Where complaints are referred to the FOS, the FOS continues to overturn in favour of the consumer the great majority of firms’ decisions rejecting the complaints,” the FSA said.

“These trends suggest that there is an even greater extent of mis-selling and potential consumer detriment than we had assumed in [2009] and that makes the need and case for an effective approach to addressing such detriment stronger, not weaker,” it added.

The key features of the new rules are that if someone complains:

-they should be reimbursed their PPI premiums, plus interest, if the firm decides the customer would not have bought the policy in the first place
-where the premium was a single payment up-front, if the firm concludes the customer would have bought a regular premium policy instead, he or she should be put back in the position they would have been had they done so.

The FOS revealed that it had dealt with more than 100,000 PPI complaints already, with just over 48,000 arriving in the past financial year and an extra 21,000 coming in since 1 April this year.
“We hope to see complaint numbers fall over time as firms deal with them better in the first instance,” the FOS said.

The FSA’s estimate of how much will have to be reimbursed in total is based on an assumption that some lenders will contact people who may not have complained, but who might still have been sold a policy wrongly.
Last year, firms were told to re-open 185,000 old complaints they had previously rejected.
“For years, the industry has handled poorly thousands of PPI complaints so it’s important that the FSA is able to force firms to review old cases,” said Which? chief executive, Peter Vicary-Smith.
“We want the government to act swiftly and activate the FSA’s power to force lenders to review rejected PPI cases so consumers whose complaints were wrongly dismissed can get the redress they are due,” he added.
The Competition Commission is expected shortly to announce its own rules to prohibit the sale of PPI policies at the point when someone is granted a loan.

Last month, Lloyds became the first bank to break ranks with the rest of the industry when it decided to would stop selling PPI to its own borrowers.
HSBC stopped selling PPI polices in November 2007 “across all the HSBC group of companies”, a spokesman said.

Royal Bank of Scotland has reported a half-year loss after taking a £733m provision for its exposure to Greek government bonds.

RBS – 84%-owned by UK taxpayers – reported losses after tax of £1.4bn for the six months to 30 June; RBS also allocated £850m to cover claims for the mis-selling of Payment Protection Insurance (PPI).

Chief Executive Stephen Hester also confirmed the bank would cut about 2,000 jobs in the next 12 to 18 months.

“We are forced to stay efficient and that will mean ongoing tight attention to costs,” said Mr Hester.

It is not known where the job cuts will fall. RBS has cut 27,500 jobs since the financial crisis in an effort to cut its costs and improve profits. The struggling bank led the falls on the FTSE on Friday, its shares opening down more than 13% before recovering. At 12:00 BST, shares were still the biggest faller – down around 5.8%.

Continuing worries about the impact of the eurozone debt crisis and faltering US economy on businesses have seen markets fall sharply since Wednesday.

“The banks are not going to make a profit in this sort of environment and their provisions are going to get worse. RBS has got a lot of problems,” said John Smith, a fund manager at Brown Shipley.

The bank’s statutory reported loss before tax was £794m, compared with a £1.2bn profit in 2010.

‘Head winds’

Despite the losses Mr Hester told BBC Radio 4′s Today programme that the bank’s restructuring programme was “going well”.

He said the bank had been affected by ongoing problems with the global economy which had created “head winds which will effect us in different ways”. Royal Bank of Scotland lent money to the Greek government which might now not be paid back in full as a result of the country’s debt crisis.

In its half-year results, the bank also confirmed a £1.25bn provision for losses at its Ulster Bank operations in Irish Republic and Northern Ireland. However, the bank reported an improvement in its core operating profit to £1.7bn from £1.1bn in 2010.

Business lending

In a conference call following the results, Mr Hester said the bank had exceeded its targets for business lending under the Project Merlin agreement with the government. The bank’s results said it had lent £44.2bn to UK business customers, of which £15.5bn went to small and medium sized companies.

The British Bankers’ Association claimed that banks were “on track” to meet their overall lending commitments under the agreement, despite what it claimed were difficult economic conditions.

“The bank’s efforts to encourage customers to come forward with borrowing proposals are set against the overall economic environment which remains challenging and business demand for credit which remains weak,” said a spokesperson for the UK’s major banks.