Steep rise in bank gripes

Britain's banks were hit by more than two million complaints in the second half of last year - more than double the number recorded in the same period the year before, the City watchdog revealed yesterday.

The reason for the huge rise was that complaints about charges for unauthorised overdrafts had finally been included on lenders' books, the Financial Services Authority said.

As a whole, the financial services industry got 2.65 million complaints, against 1.51 million during the first six months of this year and 1.48 million in the first half of 2009.

Consumer groups describe the banks' attitude to charges as "outrageous". But the industry insists that if it was to lower charges to people who ran up overdrafts without agreement, they would have to raise charges for "responsible" customers who did not.

The FSA monitors the way banks deal with complaints but it is all but powerless to take any action against them if they - as expected - reject almost all of the accusations.

Consumers cannot tell which banks get the most gripes, because the FSA does not separate figures by company.

But from August individual banks will have to publish their own data about their complaints and the FSA will continue to publish industry-wide figures as it did yesterday.

Under the FSA's "firms" category, backdated overdraft complaints accounted for most of the increase in grievances against banks and building societies, which totalled 2,225,458.

The regulator said the steep rise was driven by banks handling two years' worth of backdated complaints about unauthorised overdraft charges.

The complaints had been put on hold while the High Court heard a test case between the banks and the Office of Fair Trading over the charges.

The number of banking complaints threatened to obscure a dismal performance by the insurance industry, which recorded 421,368 grievances between July and December, up from 281,275 for the same period in 2008 and 336,918 in the first half of last year.

Complaints volumes have risen in every set of figures the FSA has published so far.

- INDEPENDENT