Lenders not telling people of right to refer complaint to regulator

FINANCIAL INSTITUTIONS are not informing people of their right to refer a complaint to the Financial Services Ombudsman, despite the fact that almost one-third of people are unaware of how to complain about a financial service product.

An inspection by the financial regulator into the complaints handling procedures at credit institutions has found that although the institutions surveyed had appropriate procedures and controls in place, there are still a number of issues outstanding since the last review in 2004, including a lack of consistency with regard to institutions informing consumers of their rights.

"Credit institutions should ensure that customers are made aware of complaints procedures. Our research shows that 27 per cent of consumers have no idea how to complain about a financial product or service, while only 46 per cent have a good idea how to go about making such a complaint. This clearly indicates that customers are not sufficiently aware of their financial institution's complaints handling process," said Mary O'Dea, consumer director of the financial watchdog.

Other issues identified in the inspection included inadequate maintenance of complaint records, the inability of customers to have their verbal complaints treated as a written complaint and the lack of a written confirmation of the outcome of the credit institution's investigation, which should be sent to complainants.

The regulator has written to all credit institutions to highlight these issues.