Every 6 months, the Financial Ombudsman publishes as report on the complaints it has received in the first and last half of each year. In addition to tracking the number or complaints received, it also identifies which banks receive the highest percentage of complaints. This time around, the Ombudsman identified a 13% rise in complaints compared to the same period of 2016 and Lloyds Banking Group was the big offender, being responsible for almost a quarter of all complaints, divided more or less equally between the Bank of Scotland brand and the Lloyds Bank brand. So what has fuelled this rise in complaints, why are some banks regular offenders and what can be done about it?

History and politics leads to militant consumers

Some of the rise in complaints can probably be fairly attributed to the fact that consumers are being actively encouraged to check for evidence that they may have been mis-sold products, particularly PPI on the grounds that there is a 2019 deadline for making PPI-related claims. Another part of it, however, may well be related to the fact that the banking industry in general has arguably turned into a sector with which consumers do business because they have to rather than because they want to. The nature of the complaints system is that there is effectively no potential downside to the consumer, which means that consumers may well be motivated to chance their luck with complaints against organisations they dislike anyway.

Why are some banks regular offenders?

Seeing Lloyds heading up a list of most-complained-about banks is unlikely to surprise anyone who pays attention to the industry – or who has a basic grasp of maths. The Financial Ombudsman draws up its ranking system based on the number of cases it receives. Larger banks have more customers and therefore are more likely to generate higher numbers of complaints. In fact, in principle, a larger bank could have a higher percentage of happy customers than a smaller bank and still generate a higher number of complaints. At the same time, however, it also has to be recognised that larger organisations, including banks, tend to depend very heavily on processes and if those processes are inefficient then this can not only lead to complaints in the first place but then lead to further complaints about how the complaints are handled.

What can be done about this?

Ultimately, resolving the issue of increasing customer complaints is likely to involve repairing the relationships between banks and the public as a whole and, in short, regaining at least some of the trust banks have lost over the last decade. It’s also likely to involve ensuring that customers are given appropriate and complete information in plain English for them to make informed buying choices, thus avoiding issues with misspelling, either genuine or perceived. Finally, it will almost certainly involve revising the way banks interact with their customers. It’s common knowledge that banks have been transitioning from a branch structure to an online structure and as part of this process have been promoting the idea of customers serving themselves rather than getting immediate access to banking staff. For example, if customers wish to send their bank a message they may be guided through some initial questions and then presented with a range of frequently asked questions to see if the information they need can be found within them. While it’s understandable that banks will wish to lower costs and streamline processes by helping customers to help themselves, there is a difference between prompting and guidance and putting up unwelcome barriers and banks need to ensure that they stay on the right side of it. They also need to work on ensuring that when customers do get through to front-line staff, that those front-line staff have the training, support and empowerment they need to resolve complaints effectively in first instance.