James Daley

By James Daley

It's almost five years now since the Financial Ombudsman Service (FOS) started publishing its complaints data. At the time, the industry was up in arms. People would misinterpret it, they said. It wouldn't compare apples with apples.

These protests were quite correct. While the FOS data does contain some useful nuggets for consumers, it's very easy to draw the wrong conclusions from it. And each time new data is published, the news coverage around it is often not quite right - through no fault of the journalists who are doing their best to interpret it.

Presumably the very reason this data - and the FCA complaints data - is published, is to help consumers understand which companies are good at handling complaints and which are not. Yet I think it's fair to say that so far, neither sets of data have delivered on that goal.

Clear as mud

When we set up Fairer Finance, we spent a lot of time analysing the numbers and trying to come up with a way of interpreting the data in a way that would give consumers the whole picture. Sadly, with the current complaints data that is published, this is impossible.

If you want to know who's best and who's worst at handling complaints in the car insurance sector, for example, the best you can get from the FOS is a breakdown for the whole general insurance sector. Once you dig down into this, there's a real challenge to work out which complaints data applies to which insurers. Most complaints data is reported by group, not brand, so if you want to know First Direct's record on complaints, for example, the only thing you have to go on is HSBC's data.

In insurance, it's even more complicated by the fact that there are so many companies involved in putting together every policy. You may have a car insurance policy which is sold under one brand, administered by another, underwritten by another, and whose claims are handled by yet another company.

First there's the challenge of working out which one of these companies is the one that is most likely to deal with complaints relating to your insurance policy. Second, once you've identified the right company, they may have multiple brands nestling under one group's complaints score. So, for example, Budget administers the car insurance policies of the RAC, the Post Office, M&S Bank, as well as their own Budget Insurance brand. It may be that one of those brands is much better at handling complaints than the others - due to the service agreement it has with Budget. But all that's available from the Ombudsman is one overall score for Budget.

Time for real transparency

Over the coming months, it's our mission to try and blow this issue open. We'd like to help companies report their complaints on a brand by brand basis, so that we provide an even more accurate assessment of companies than the Ombudsman does. Already, we believe our data is a big step forward in providing some useful measure of companies' complaints performance, but we know it can be better - and we can only do this with the help of the industry.

As a footnote, the FCA has even further to come in terms of making its data useful. It publishes absolute complaints numbers - which are useless unless you have a way of understanding them in relative terms. It's no surprise to me that the big four banks have the most complaints. But what's more interesting is to be able to understand which of them has the most complaints per customer. This is data that the industry has so far managed to get away without publishing - claiming that it would be commercially sensitive to reveal such information. Codswallop. If the FCA is genuine in its calls for transparency, this is an issue it needs to revisit.