Unfair contract complaints hit five-year high

CONSUMER complaints about unfair contract terms increased again in 2012-13, reaching a five-year high, up by 46 per cent in the past four years.

According to law firm Pinsent Masons, in the most recent financial year there were 289 complaints lodged about alleged unfair contract terms to the Financial Services Authority (FSA), which became the Financial Conduct Authority (FCA) in April.

Five years ago, in the 2008-09 financial year, there were only 198.

Over the same period, complaints related to insurance have grown by the largest amount, nearly doubling from 77 to 134. The number of complaints about unfair terms in banking fell considerably in the past year, down from 27 to 10.

Despite the rising number of complaints, the number that was actually progressed by the regulators at the FSA/FCA dipped by 17 per cent, down from 130 to 108. Of the 134 complaints about insurance received in the last financial year, only 35 were actually progressed by the regulators.

Alexis Roberts, head of insurance and wealth management for Pinsent Masons, commented: “Following the payment protection insurance (PPI) miss-selling scandal, consumers arguably have a heightened awareness of unfair treatment and are much more likely to complain and question terms and conditions. It wouldn't surprise me if this is behind the big increase in referrals.”

He added: “Social media is becoming an increasingly powerful tool for consumers and a bad experience with unfair contract terms can quickly spiral into a major reputational issue for the insurer involved, and damage a well respected brand.”