The number of new disputes received by the Financial Ombudsman Service (FOS) has increased steadily over the first quarter of 2012 with 9590 complaints received.
This is up from 8256 in the previous quarter and significantly more than the 7415 submitted in the corresponding period last year.
Almost half the new complaints received by the ombudsman in the January-to-March period were credit disputes, with another 29 per cent categorised as general insurance disputes.
Disputes about payments systems, deposit taking, investments and life insurance collectively made up a further 20 per cent of the total.
FOS registered 4885 disputes in the January-to-March period, which is the first stage in its dispute-resolution process.
Registering a dispute involves recording the basic details of the complaint and then referring it on to the financial services provider (FSP), giving the defendant an opportunity to resolve the issue without further FOS involvement.
“We registered 4885 disputes in January–March 2012,” said FOS in a statement.
“At the end of the quarter, half of these disputes were still open in registration, 23 per cent had been resolved by the FSP and 24 per cent had progressed to the acceptance stage of our process.”
In the first quarter of this year the ombudsman accepted 6723 disputes in the second stage in the dispute-resolution process, in which FOS starts to play an active role in trying to resolve disputes.
This number is up 18 per cent on the previous quarter and up 39 per cent on the corresponding 2011 quarter, with a similar breakdown to the total disputes received.
FOS also closed 8734 disputes in this quarter, up 5 per cent on the previous quarter and up 20 per cent on the January-to-March 2011 quarter.
Three-quarters of the disputes closed were resolved through an agreement between the FSP and the consumer. Only 8 per cent of the closed disputes required a formal decision by FOS.
Statements of advice need clarity
The ombudsman also warned financial advisers to pay closer attention to the statements of advice (SoA) they produce for clients.
“We handle many financial advice disputes in which a retail client says they did not understand the advice they received from the FSP. In these disputes, the quality and clarity of the information in the SoA is a critical issue,” said FOS in a statement.
“The question of whether a retail client has given their informed consent to take up the FSP’s advice is a critical issue in the majority of financial advice disputes handled by FOS.
“Where this issue is raised, we will look at all of the disclosures made by the FSP to the client. A key document in this regard is the SoA.
“If the information in the SoA is not ‘clear, concise and effective’, then FOS might find that the client did not understand the advice and the FSP had failed to secure the client’s informed consent to take up the advice.”
