The Financial Ombudsman Service (FOS) has published its Annual Review for the 2016-17 financial year (1 July 2016 to 30 June 2017). The Review identifies current issues which financial service providers should consider.

Its analysis of disputes shows:

• an increase in general insurance complaints;
• the most common issues in credit disputes were financial difficulty and dissatisfaction with a finance service provider (FSP) decision;
• for consumer credit disputes 38% were about credit cards, 27% were about home loans and 21% were about personal loans.

Systemic issues
Systemic issues resolved included:

• improper credit default listings;
• terms and conditions which did not clearly state the consequences of an overdrawn account;
• unfair terms regarding the cancellation of insurance policies;
• the handling of complex travel insurance claims arising from medical matters with a focus on drugs and alcohol;
• online forex trading platforms outages;
• policies for dealing with customers in financial hardship;
• policies and procedures for dealing with power of attorney and enduring power of attorney matters.

The Review gives the following examples of definite systemic issues:

• A life insurer failing to ensure the veracity of information from third party report providers relied on when terminating claims;
• Notice of refusal of insurance letters sent to customers advising, outside the general insurer’s entitlements, that the customer was obliged to disclose a refusal of insurance;
• The application and calculation of interest to ‘purchases’ made using a credit card.

Improvements and amendments
Issues which were not systemic but which were reviewed included:

• product terms and conditions which did not clearly explain when default interest can be charged;
• resourcing and training of life and general insurance claims-handling staff to ensure more prompt decisions for policyholders;
• processes for engaging with external dispute resolution;
• policies and procedures, as well as training, for teams dealing with customers in financial hardship, as well as collections teams;
• a contract variation fee for customers in financial difficulty;
• online banking systems to better alert customers to situations where account details are incomplete;
• training of branch and telephone staff dealing with vulnerable customers;
• processes for depositing money in trust accounts.

Other common issues

FOS notes that other common issues continue to be:

• compliance with the National Credit Code;
• suitability of insurance products (such as guaranteed asset protection (GAP) and add-on insurance) and investment products;
• conduct of employees and authorised representatives;
• incorrect claim denial.