The UK’s Financial Ombudsman Service (FOS), which settles disputes between consumers and financial service providers such as insurers, reported that it saw 344 new cases filed during the third quarter (Q3) of the 2021/2022 fiscal year relating to travel insurance products.
In addition, the service received 547 enquiries during the Q3 period (October-December 2021).
This represents a substantial fall in submissions from both categories compared with the same period in 2020/2021, in which 2,378 new cases and 2,688 enquiries were made.
Of these cases, 287 were referred for an ombudsman’s decision – compared with 175 referrals for Q3 2020/2021 -with 41 per cent of them upheld – a rate which is roughly comparable to the 38 per cent of cases upheld in the period last fiscal year.
The similarity in the number of cases submitted for ombudsman decisions, and the similar levels of cases being upheld, could suggest that while the number of serious cases remains roughly the same, the number of frivolous case submissions may have declined over the past year.
FOS also received complaints about packaged bank account benefits
In addition, the FOS received a total of 1,477 complaints and 1,543 enquiries regarding packaged bank account products in Q3 2021/2022 – one of the most complained-about financial products during the quarter.
This represents a slight decline in new cases year-on-year, compared with 1,522 complaints filed in Q3 2020/2021, and a substantial fall in enquiries, from 3,193 for the same period. However, overall
The majority of complaints were from consumers who felt that they had been mis-sold the account, with the FOS stating that many complaints were due to consumers not using the benefits which accompany these types of accounts, such as travel insurance.
Not using a packaged account benefit is not sufficient reason to conclude mis-selling
However, the service stated: “Not using the benefits of a packaged bank account is unlikely to be a sufficient reason for us to conclude that the account was mis-sold. However, if a consumer cannot use the account benefits – for example they cannot use the travel or mobile phone insurance or the roadside cover policy – then we might conclude that the account was mis-sold and tell the bank to refund the fees.”
This led to only 143 of the total cases for the product type being referred for an ombudsman’s decision, and only four-per-cent of all cases being upheld – the lowest uphold rate of any products during the quarter. This is roughly consistent with the same period in the previous fiscal year, which saw only 110 cases proceed to ombudsman arbitration, and only five per cent of those being upheld.
The FOS recently published a new five-point ‘action plan’ which it says is intended to guide improvements to the service’s efficiency and effectiveness.