Named and unashamed
Sydney Morning Herald
Wednesday March 30, 2011
For the first time, the ombudsman has revealed the companies attracting the most complaints. For the first time, the Financial Ombudsman Service (FOS) has released the names of financial services companies that have the most consumer complaints against them.Hot-spots for complaints appear to include housing finance, consumer loans, managed investments, car insurance and travel insurance.While the information is useful for consumers, they need to exercise a degree of caution. Many of those named have disputed how the numbers have been reported.The FOS process is still a work in progress but it shows, very generally, that smaller financial providers tend to have more disputes in proportion to their size than larger businesses.Previously the FOS, which covers banking, life insurance and investment disputes, reported statistics on what type of complaints it had received, case studies of actual complaints and the outcomes but did not name names.The tables with names have been added to the Ombudsman 2009-10 annual review and cover the first six months of 2010.The ombudsman has divided up the complaints data into 20 financial product categories and then gives the number of complaints relative to the size of business.A large business, such as a big bank, is expected to have more complaints than a small bank. To account for that, FOS reports complaints per 100,000 customers, or policies, in the case of insurance. However, for those financial services providers that did not inform FOS of how many customers, accounts or policies they had, FOS published the actual, or raw, number of complaints.That creates an incentive for a small business to withhold data on its size from FOS. It means that some of the smaller financial services providers with a high number of complaints may not be appearing among the most-complained-about in the tables.TRAVEL INSURANCEWhile the median number of disputes per 100,000 travel policies-in-force is less than six, CGU Insurance had almost 81 complaints per 100,000 policies. The company disputes the data."Figures in this report do not accurately reflect the experience of CGU's travel insurance customers," a CGU spokeswoman says.In the six-month period covered by the FOS data, 40,000 policies were in force and CGU had many "group" policies that covered thousands more customers.From the total number of policies there were six complaints to FOS during the reporting period. "We are now talking to FOS about how we ensure that the data accurately reflects CGU's service in future," the spokeswoman says.While the median number of complaints was seven for motor vehicle insurers, Avea Insurance had 50 complaints per 100,000 policies.The managing director of Avea Insurance, Peter Carroll, says it is a small insurer with about 8000 policies. There were only four complaints from which FOS scaled that number to become 50 complaints per 100,000 policies. Of the four complaints, one was not pursued by the complainant. The other three were "low level" complaints concerning the "excess" they were required to pay.MANAGED INVESTMENTSIn managed investments, the problem is with financial planning groups.According to the FOS data, Financial Technology Securities had 159 complaints per 100,000 during the reporting period.There are a high number of companies in this product category that have not provided sufficient data to FOS about the size of their businesses and, as a result, the actual, or raw, number of complaints is provided.For example, Prosperity Advisers had 11 complaints that, depending on the size of the business, may or may not be a high number.The financial planning firm Tynan Mackenzie had 45 complaints per 100,000. A spokesman says the company was unclear whether to report households or client accounts to FOS. Tynan Mackenzie reported households but had it reported the "number of accounts" - which is higher - the complaints per 100,000 would be 31 instead of 45. The spokesman says the actual number of complaints during the period is two.CONSUMER LOANSIn consumer loans, the median number of complaints was 12 per 100,000. EM Finance Corporation had 144 complaints per 100,000 - the most complaints in the product category.The director of EM Finance, Regan Passlow, says there were only four complaints in the six-month period covered by FOS and that was an unusually high number.The loans are for small amounts to people who have difficulty obtaining finance from banks. Passlow cannot see "how there is value in this [information] for anybody".Since the middle of last year, the end of the reporting period covered by the FOS complaints data, no complaints have been made, Passlow says.In housing finance, RHG Mortgage, formerly known as RAMS, had 107 complaints per 100,000 loans, followed by HSBC Bank Australia with 50 per 100,000.The chief ombudsman at the FOS, Colin Neave, says as this is first time this has been done, the FOS is happy to talk to financial services providers about how the information could be better presented."But we think that it is very important that we provide this type of information because it is, in our view, more informative than the sort of information which has been published in the past by various dispute resolution schemes," he says."We think that the smaller players in the market, generally speaking, are closer to their customers but they also need to have in place appropriate dispute resolution mechanisms, which means they avoid having the disputes coming to us."Key points Financial services companies and level of complaints named. Hot-spots include travel insurance and consumer loans. Complaints data will be released each year. Smaller companies need to have better complaints handling
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