FOS notes 12% rise in insurance complaints in 2012

The Financial Ombudsman Service (FOS) saw a 12% increase in insurance complaints in the past year, including a rise in gripes about mobile phone insurance and card protection cover.

But complaints about the way that big motor insurers handle claims still make up the bulk of the FOS’s insurance caseload outside payment protection insurance (PPI), according to recent figures published by the watchdog.

The figures come in the FOS’s joint update on complaints for the 2012 financial year and a consultation on its plan and budget for the 2013/14 financial year.

The FOS document said: “After a significant increase last year in our insurance caseload, we had hoped to see fewer complaints this year. Disappointingly, the number of complaints has increased again – so far by around 12%.”

In the 2011/12 year, the FOS handled 27,554 new non-PPI insurance cases, and has estimated that it will have handled 29,500 by the end of the 2012/13 year. The watchdog has budgeted for handling 31,000 complaints in the 2013/14 year.

The body wants to increase its standard case fee from £500 to £550 from April 2013. It also proposed to keep the PPI supplementary case fee at £350 for a further year, but to keep this fee level under review.

The FOS also said that it planned to ask the FSA to increase its compulsory jurisdiction levy from £17.7m to £23m for 2013/14. This will cause a slight increase in FOS fees for insurers and brokers if implemented.

The FOS also plans to increase the number of free cases it can handle per firm from three to 25.

Deputy chief ombudsman Tony Boorman said: “While we see some businesses using complaints positively to improve customer service, many continue to frustrate their customers with delays and inconvenience. This has a marked impact on our workload.

“Two years after the court ruling confirmed the approach that financial businesses should take when handling PPI complaints, it’s disappointing that we’re still seeing significant numbers of unresolved disputes about mis-sold policies being referred to the ombudsman.

“Our proposals ensure we have the resource to tackle these record case volumes and the businesses responsible for generating the biggest workload contribute the most to sorting it out.”

The FOS is also consulting on issues such as the number of new cases the insurance industry expects to refer to it, the levy and case fee increases and plans to increase the number of free cases.