The data, released for the first time to the public, show that complaints about credit cards have more than doubled in the past two years.
The Financial Services Authority (FSA) figures show an increase from 73,500 at the start of August 2006 to an unhealthy 151,000 by the end of 2008. After current accounts and the mis-selling of mortgage endowments, they are the third most complained about product.
Banks are now required to report to the FSA every six months on the number of complaints they receive and how they handle them.
Banks Unresponsive to Credit Card Complaints
Though the number of complaints is growing at a shocking rate, it seems that banks willingness to accept them is not. Just under half (49%) were decided in the customer's favour by banks at the start of August 2006. By the end of 2008 that number had dropped to 38%.
The bank's one saving grace is that the complaints seem to be dealt with relatively quickly - 90% are processed within eight weeks.
The reasons for the complaints will be familiar to many. The number of disgruntled consumers soared after credit card interest-rate rises last year, despite the Bank of England base rate being at a record low of 0.5 per cent. Several providers, including Nationwide and Egg, increased rates by up to 10%.
According to The Times ("Banks Failing On Complaints," 6th September 2009 ), there were also complaints about the rejection of requests for Section 75 refunds, whereby the credit card firm is liable for consumer refunds if a company goes bust.
Increasing Number of Defaults
Consumer groups and analysts said that despite being told to reduce charges to no more than £12 three years ago, firms have simply pushed up other charges to make up for any lost income.
Research carried out by personal finance website www.uswitch.com found that in the past year, credit card companies amassed a staggering £213million in penalty charges. One in five people has incurred a penalty fee in that time, with some 5.7million stung more than three times on average. Those incurring the fees paid an average of £37.20 last year, from an average of 3.1 charges.
FSA Figures Limited
The figures relating to the resolution of credit card complaints are bundled in with those relating to current accounts, deposits/ savings, other loans, and cash deposit ISAs. This, together with the failure to identify the individual guilty banks has led some to question their practical use.
The Association of British Insurers claim he FSA’s data will not help consumers “because it doesn’t allow t"hem to compare the performance of different companies for specific products" ("Bank complaints soar by 122%," The Guardian, 3rd September 2009).
Company-Specific Complaint Figures
The Financial Ombudsman Service (FOS) is taking steps to rectify this by publishing company-specific complaint figures for the first time within the next two weeks. The FSA hopes to implement the same by October next year. Individual companies will start to publish their own complaints data from July 2010.
Which? personal finance campaigner, Phil Jones, said: "Consumers need more information about which firms are being complained about and why, so they can make more informed choices when shopping around for financial products."
Justin Schamotta - Justin was born in South Africa, raised in the Welsh Valleys and now resides in Brighton. He has been co-editor of Bulb magazine, deputy ...
