New figures show a sharp fall in the number of customer complaints made to banks in recent months. Vicky Shaw looks at how financial services firms appear to be putting the scandals of the past behind them

CONSUMER complaints to banks about their products and services fell by half a million in the first six months of this year, compared with the last six months of last year.

Overall, 2.9 million customer gripes were recorded between January and June, down from 3.4 million in the previous six months, according to figures released by City regulator the Financial Conduct Authority (FCA).

Driving this decrease was the first drop off in complaints about payment protection insurance (PPI) seen in three years. It has now dealt with one million cases, and is still seeing up to 10,000 PPI complaints a week.

Consumer group Which? estimates that people have collectively paid more than £50bn for PPI policies over the past 16 years, although not all of them were mis-sold.

The size of the scandal escalated beyond expectations and, so far, banks have put more than £18bn aside to compensate customers who were missold the insurance – that is about double the cost of the London 2012 Olympic Games.

Banks have also been criticised by the ombudsman service in the past for dragging their heels over complaints, and leaving the ombudsman to sort out consumers’ PPI gripes instead.

As recently as July, chief financial ombudsman Natalie Ceeney was criticising signs of bad practice in PPI complaints handling procedures, which she said were adding to an atmosphere of universal suspicion and distrust among consumers.

But now, finally, it seems as though the PPI mis-selling storm may be starting to die down.

Just under 1.8 million PPI cases were opened in the first half this year. While this is still a large number, it marks a drop of almost one-fifth (18 per cent) from the peak of 2.2 million complaints received in the previous six months. Until the release of the latest figures, complaints made to financial firms about PPI had been steadily rising each half-year since about 2010.

Ian McConnell, a financial services partner at the firm PwC, said: “This is a good outcome for customers and banks.

It demonstrates that the number of customers with concerns is reducing, albeit from a significant base. In addition, if this trend continues, banks will be able to divert more attention to servicing their customers, going forward rather than constantly looking back.

“In particular, the numbers would suggest that the back of the PPI issue has been broken and is now on a downward trend with banks getting through complaints more efficiently.”

The FCA’s figures also show that banks are clearing up complaints generally at the fastest rate since similar records began. Nine out ten (92 per cent) of complaints made to financial services firms were dealt with within eight weeks, marking the highest proportion seen since records began seven years ago.

For their part, banks have promised that there will be no return to the bad practice and mis-selling scandals of the past.

The British Bankers Association (BBA) has said the figures are encouraging.

A spokesman for the BBA said: “Banks continue to improve their products and services and have placed their customers at the centre of everything they do. Staff are now rewarded for high levels of customer service and not sales volumes.”

So, while high levels of PPI complaints continue to be received, it looks as though there is finally a chink of light at the end of the tunnel.

Richard Lloyd, chief executive of Which?, reminds us that while the fall in complaints is welcome, there is still much more work to be done and the figures are still far too high.

He hopes new rules introduced last month, to make it easier to ditch your old current account provider and switch to a new one, will also force banks to up their game and work harder to satisfy consumers.

The switching guarantee has cut the length of time it takes to change banks from up to 30 working days to seven and all outgoing and incoming payments now move over automatically with the consumer.

Mr Lloyd said: “We want banks to deal with complaints swiftly and fairly and to explain what steps they are taking to stop the same problems occurring in the future.

“We hope the introduction of the new, faster switching guarantee will force banks to compete for customers, improve their customer service and offer better products.”