Mortgages and the operation of bank and building society accounts generated the most complaints to the Ombudsman for Credit Institutions in the year ending September 30th.

The Annual Report of the Ombudsman for Credit Institutions, released yesterday, showed a 14 per cent increase in complaints over the previous year to 1,507. "This increase is attributable to the widespread publicity surrounding the banking industry and the demutualisation of building societies," says the ombudsman, Mr Gerry Murphy, in the report.

The ombudsman investigates complaints and rules on disputes between banks and building societies and their customers.

Of the total complaints submitted, 1,412 fell within the ombudsman's remit and were referred for resolution to the internal complaints procedure of the institution involved.

Mortgages accounted for 31 per cent or 467 of these complaints. Most of these related to the costs involved when breaking a fixed interest rate mortgage agreement.

The operation of accounts at 27 per cent was the next largest source of complaints, according to the ombudsman.

These 406 complaints involved lodgments, debits, credits, direct debit and credit transfer transactions, disputes about cheques, cash lodgments and cash withdrawals.

Lending notched up almost 17 per cent of customer complaints during this period but the number was down slightly to 252 from 259 last year. Investments were another sore point with customers providing just over 9 per cent of the total.

The remaining complaints involved poor service, ATMs and credit cards. Poor service complaints increased to 91 over 65 last year and foreign exchange complaints were up sharply at 46 per cent over 24 per cent last year. "This increase was brought about by issues arising from the euro, especially new methods of charging for FX transactions and the fact that sterling was not in the system," said Mr Murphy's report. Dissatisfaction with the use of ATMs was recorded in 47 instances, up from 29 in the last report.

The nature of most complaints involved unfair treatment, maladministration or breach of contract. Institutions' internal complaints procedures amicably resolved 926 of the 1,412 cases referred by the ombudsman. The 486 not resolved were investigated, resulting in 189 complaints upheld and 253 not upheld by the ombudsman. The remaining 43 were resolved during the investigation and one case was withdrawn.

Most investigations by the ombudsman involved mortgages reflecting 28 per cent of the total cases. In most of these situations, the ombudsman ruled that payment sought by the lender was in accordance with the terms and conditions of the contract. The nature of the complaints under investigation were the same as those initially made to the ombudsman.

Every initial complaint received a written response from the ombudsman's office within 48 hours and complaints were ideally resolved within three to four months. The cost of operating the scheme in the year under review was £330,000 (€419,314).

The ombudsman has the power to award compensation of up to £30,000 in any particular case and his rulings are binding on the bank or building society concerned. Individuals are not bound by the decision but may avail of the ombudsman scheme free of charge.