The number of grievances received by the Financial Ombudsman Service (FOS) relating to mortgages has fallen in the year up to March 31st, 2015, when compared to the previous period.

This year’s figure of 12,297 complaints was a fall of 2% on the number from the period up to March 2014 (12,606), although it is still significantly higher than the 2011 total of 7,067.

How this affects the industry

The figures from the FOS, published in its annual report, suggested that the number of people making complaints about interest-only mortgages is continuing to rise. The report read that people are often concerned that they will not be able to keep up with their repayments and that many people make complaints questioning the advice they have received.

The report also raised concerns over the miss-selling of interest-only deals to people mortgaging their homes in order to invest their money in properties overseas. The FOS stated:

“…the overseas properties in question have general been bought “off-plan” – but often haven’t materialised.”

However, it also highlighted the fact that it had received fewer complaints from people:

“…at the end of their interest-only mortgage arrangement who couldn’t repay the capital.”

This indicates that lenders are working with borrowers to find better solutions to situations where people are struggling to make repayments.

How to cut down on complaints

The report stressed the impact that communication, and recognising mortgage payment issues early, can have on customer experience. The FOS said it was disappointed by the high number of cases referred to it which could and should be managed by the lenders themselves. These include problems with administrative errors and cases where lenders “hadn’t identified their customer’s specific concerns”.

More broadly, it underlined the need for lenders and borrowers to work together to identify problems, and to find solutions that work for both parties. Many grievances from people in financial difficulty were received too late, when things such as repossession orders had already been handed out, and there was no way of avoiding the subsequent problems caused by this.

The FOS recommended that lenders should be “alert to early signs that their customers are struggling”. This includes working with free organisations, such as Stepchange and National Debtline, which can offer advice and guidance to people experiencing financial difficulties.

Elsewhere, the report showed again the huge number of complaints received around the miss-selling of PPI, particularly when it had been sold along with a mortgage. It states that, although many complaints are received in relation to PPI sold with mortgages, the FOS was generally inclined to disagree that it had been miss-sold.

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