Banks fight complaints to save cash

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Banks officially have no shame. It's bad enough that they are inundated with complaints at every turn for everything from shoddy service to damaging sales techniques. To make matters worse, they fail to address many of these complaints properly, so consumers are forced to go to the Ombudsman.

Now it emerges that they are increasingly prepared to go even further, and fight the Ombudsman if it rules in favour of the customer.

Complaints rising

The Ombudsman has released figures relating to complaints for the year, and they make depressing reading. Overall complaints are up 26% to 259,200.

Insurance complaints in particular are on the rise - up from 20,967 in 2010-2011 to an estimated 28,100 this financial year. Much of this is down to expensive domestic and energy cover or poorly-handled motor insurance claims.

Fighting complaints

However, the worrying information is in the way insurers and banks are treating complaints. An Ombudsman spokesman told The Daily Mail that they are taking a far harder line. In the first insurance they are rejecting more complaints - which is one reason why the Ombudsman is seeing so many more cases.

If the Ombudsman goes against them, they are increasingly appealing the initial decision - even on relatively small and low-cost issues. And if the decision goes against them again, they are waiting as long as they can before paying up.

Unfortunately, things aren't set to get any better in the immediate future. The Ombudsman is gearing up for another 10% increase in complaints next year, as the financial companies continue to drag their heels.

Why

Clearly the financial boffins have calculated that they have little to lose because their brand is already trashed. Therefore, they can push their luck as far as possible in an effort to cling onto as much profit as possible.

It's appalling behaviour, but perhaps we shouldn't be surprised. Banks and insurers are coming under pressure from regulation, which is designed to make them behave better - but is costing them a great deal of money. They have been stopped from raking in profits in a number of ways, so they are increasingly looking to clamp down on costs everywhere possible. They were bound to put the squeeze on compensation in this kind of market.

Because while the regulators will do everything they can to protect us, we have to face up to the fact that financial companies are in this business to make money. And by hook or by crook they'll make us pay for it every time.

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