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JEFF PRESTRIDGE: Can't all companies follow Nationwide's lead on complaints
By Jeff Prestridge for The Mail on Sunday
Updated:05:43 EST, 5 March 2012
Dynamic: Otto Thoresen is keen to force pension reform
How companies respond to complaints is a good barometer of just how committed they are to treating customers fairly.
Nowhere is this more so than in financial services, and people should take this into account when seeking a home for their savings, searching out a home loan or taking out a pension or life cover.
The publication of the latest data from the Financial Ombudsman Service last week gave us the opportunity to examine the complaints-handling records of individual financial services companies – from big banks through to credit card issuers and building societies.
The gulf between the ‘good’ and the ‘bad’ is quite remarkable as the following two examples demonstrate.
First, take complaints about the selling of that nasty product called payment protection insurance – cover designed principally not to pay out.
At present, more than 1,000 PPI complaints are being received by the FOS every working day, and the complaints adjudicator of last resort estimates this deluge will not abate until the end of next year at the earliest.
In the last six months of 2011, Barclays, Cheltenham & Gloucester (owned by Lloyds), Firstplus (part of Barclays) and Lloyds all had 99 per cent of PPI complaints upheld against them. Nemo, the personal loan arm of Principality Building Society, had 100 per cent upheld.
In contrast, Nationwide had only seven per cent of the FOS’s PPI cases go against it, suggesting a real difference in the culture of sales and the fairness and reasonableness of complaints resolution within the society.
Nationwide, obviously, takes complaints-handling deadly seriously. Rivals don’t. Please note.
Second, in the last six months of 2011, successful complaints against Nationwide dropped from 14 per cent to 12 per cent.
Some companies had too few unresolved complaints to be included in FOS’s tables (NFU Mutual and Coventry Building Society). Industrywide, the average uphold rate rose from 47 per cent to 72 per cent. As I said, some companies care. Others don’t. Take note.
Another piece in the jigsaw of turning your pension into a decent income for life is set to fall into place tomorrow.
The Association of British Insurers will publish the final version of a new code of conduct on annuities. This will force all its members to stick to new standards when a pension saver reaches retirement.
In theory, those retiring with a pension fund are free to use the open market option (OMO), shopping around the entire insurance market for the best annuity rate to provide them with an income for their whole retirement.
In practice, only a minority do so. Hundreds of thousands each year simply tick the box to take the pension – typically an inferior one – offered by the company that has managed their money up to retirement.
The code will force insurers to give savers clearer and better
information upon their retirement.
They should find more of a standardised process when they come to retire, regardless of who their pension is with. And there will be a stronger push to consider health and lifestyle factors that could entitle a saver to an enhanced annuity rate.
Another improvement is the automatic inclusion in retirement packs of a list of independent specialists that can help you find a good deal.
And the ABI has promised to publish annuity rates from all members, not just those that actively compete for business, giving consumers a better idea of how generous their existing provider is.
The code is not perfect. There is still no expectation that using the open market option is the default position.
But it is a good step forward. Financial Mail has been campaigning for more than a decade on the need for better annuity advice, and urging readers to use their OMO.
And the code is a sign that ABI director general Otto Thoresen, who has been in the role just over a year, is serious about forcing through changes in an institution previously not famed for its dynamism.
His mantra is now putting consumers first. Insurers will have 12 months to implement the code, but there is nothing to stop ABI members making changes sooner.
The quicker they act, the more pensioners will benefit.
Tomorrow is the third anniversary of the Bank of England dropping its base rate to 0.5 per cent, with no increase expected soon.
But that has not stopped Halifax today announcing a significant rise in its standard variable mortgage rate.
From the beginning of May it will rise from 3.5 per cent to 3.99 per cent. About 850,000 borrowers will see repayments jump. It means someone with a £150,000 repayment mortgage over 25 years will pay £39.99 a month more – £790.93 instead of £750.94.
The increase is bad news (Royal Bank of Scotland has also ticked up rates), but Halifax should not be criticised too harshly. Even 3.99 per cent compares well with the SVRs of many rivals.
Santander has an SVR of 4.24 per cent and, among the building societies, Skipton charges 4.95 per cent, Yorkshire 4.99 per cent and Leeds 5.69 per cent. Many other local building societies have SVRs above 5.5 per cent.
David Hollingworth of London & Country Mortgages says Halifax’s move shows how ‘fragile funding conditions are for lenders’. He thinks others will follow the lead of Halifax and RBS.
Many borrowers on SVRs, including those exposed to the new Halifax rate, could protect themselves from further rate increases by remortgaging.
Hollingworth says there are a number of fixed-rate deals, available from the Post Office and Hanley Economic and Nottingham building societies, for example. These charge, respectively, 3.09 per cent and 3.34 per cent (for two years) and 3.19 per cent (for five years).
But borrowers will need sufficient equity to qualify and will have to factor in remortgaging costs.
However, for some there are savings to be made.
Category: Mortgage complaints