Banks dismiss millions of overdraft complaints

Banks were forced to handle over a million additional complaints after they were faced with a backlog regarding bank charges, according to the City watchdog.

Approximately 2.6m customers complained about their chosen bank during the last half of 2009 according to the FSA (Financial Services Authority) compared to 1.5m during the previous half of the year.

The large rise in complaints is thought to be because banks were forced to process over a million overdraft complaints after winning the November test case against the OFT.  After this win, all complaints that were about unauthorized overdraft charges since July of 2008 that were on hold were processed.

Although the figures from the FSA do not show how many of the complaints were upheld, MoneySavingExpert.com staff member Martin Lewis said that most were probably rejected automatically by the banks.

He stated that a standard letter is sent out to customers to automatically reject complaints that normally have enough legal jargon written into them to scare people away from appealing their case.

About half a million new complaints were also made about general insurance with about 44% of those relating to sale of products and advice.  This most likely is a problem with payment protection insurance policies.

Out of all of the complaints that were received, 45% were founded in favour with the consumer, which is an increase over the beginning of 2009, when only 48% favoured the consumer.  Banks was forced to pay out £284m to customers, out of which £144m went to insurance complaints.

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