The Financial Ombudsman Service has released information about the total number of complaints received in the second quarter of 2012 along with the breakup of the types of products that people complained about the most. There has been 63% increase in the complaints relating to income protection policies. While the total contribution of these policies to total complaints received may be less; the increase indicates that people are still not happy with the quality of services provided by policy sellers. While the total number of complaints has risen, the success rate has come down with only 31% of the customers receiving compensation from banks as compared to the 41% success rate enjoyed by customers in the second quarter of 2011.
The according to the FOS, the economic downturn combined with the loss of jobs is the primary reason behind the increase in complaints relating to income protection policies. Rising unemployment has compelled many persons to file claims on the income protection policies. Many such individuals have discovered that they do not enjoy protection of the PPI policy or have been excluded according to the exclusions specified in the terms and conditions of the policy. This has prompted them to approach the financial mediator seeking compensation. Despite the increase in the number of complaints relating to income protection, there has been a 40% reduction in the total number of complaints received by the FOS in the second quarter of this year as compared to the second quarter of 2011. However, close to half the total number of complaints received in the second quarter of this year are related to PPI policies.
Critical illness policies have also been a source for complaints by customers. From 162 complaints received in the second quarter of the previous year, the FOS has received 234 complaints in the second quarter of this year, a rise of 44%. Whole life insurance policies related complaints rose by 35% while personal pension products related complaints rose by 17%. Annuities did not attract a lot of customer attraction as complaints rose by just 10%. Portfolio management saw 60% of all complaints being ruled in favor of customers with an 18% increase in the number of complaints as compared to the previous year.