Financial services pay out €400k compo

The Financial Service Ombudsman (FSO) ordered nearly €400,000 of compensation be paid out to customers of banks, insurance companies, and investment firms in the first six months of the year.

More than €150,000 in compensation was paid out for complaints about insurance, €146,000 relating to investments, and €100,000 as a result of complaints against the banks.

Half of all complaints received by the office of the FSO were in relation to insurance companies as the number of complaints about payment protection insurance rocketed by 150%.

Of the 4,676 complaints made to the office, half were in relation to banks while 36% of complaints came from the banking sector, with mortgages the product that had most customers complaining to the ombudsman’s office.

Complaints relating to investment products made up a further 12% the report said.

The FSO made findings in 1,503 cases. However, more than a fifth of cases were settled without the need for full adjudication by the FSO.

In terms of outcomes, the insurance sector performed better than the banks.

The report found that the majority of these complaints related to the mis-selling of the payment protection insurance which had been driven by both the media attention and a number of claim firms coming to Ireland making complaints about the product on people’s behalf.

The ombudsman Bill Prasifka said that the level of complaints in payment protection insurance was driven by media reports and claims firms, but the number will have to decline “or soon the whole country will have made a complaint”, he said.

As mortgage complaints become more prevalent, increasing by 51% compared to last year, the FSO warned that the banks need to engage with their customers more or face fines of up to €250,000.

The report found that 10% more complaints were upheld against the banking sector compared to the insurance and investment sectors.

The increase in mortgage complaints was driven by the mortgage arrears resolution process and tracker mortgages, the report found.

“The banking sector has not shown an improvement in its complaint handling,” Mr Prasifka said.

“Mortgage complaints and general account administration are two areas in particular where the banking sector must show improvement, particularly as this office has issued many findings in both areas showing how such complaints will be considered.”

The office has introduced practices it is hoping will streamline the complaints process in the ombudsman’s office.

The new approach requires complainants to first engage with their financial institution before going to the FSO.