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Ombudsman reveals the most dispute-prone financial institutions

Following the release of its annual report earlier this month, which revealed a surge in complaints, the Financial Ombudsman Service has released details of the financial institutions that are the most dispute-prone.

FOS received 39,479 disputes during the year to June – an increase of 16 per cent over the previous year. Consumer credit disputes topped the list of complaints but the growth in dispute number was a result of problems in the general insurance market.

FOS says the growth in general insurance disputes reflects heightened consumer awareness and expectations in such areas as claims turnaround and repair quality.

The majority (94 per cent) of FOS’s 13,422 members (financial institutions) had no disputes lodged against them. When members did have a dispute lodged against them, most had only one dispute.

However, there were 49 members each with more than 100 disputes lodged against them.

Financial planners account for 27 per cent of FOS membership, accountants 15 per cent, general insurance brokers 13 per cent, fund managers 7 per cent, finance brokers, 6 per cent and credit providers 6 per cent.

Forty-three per cent of disputes were related to credit, 35 per cent to general insurance, 7 per cent to deposit taking, 5 per cent to payments and 5 per cent to investments and advice.

Rather than publish the raw number of disputes for each financial institution, FOS provides a measure called “chance of a dispute coming to FOS”, which shows the number of disputes relative to the size of the business.

For example, the likelihood that a credit card customers home will take a dispute with their American Express to the Financial Ombudsman Service is 38.6 in 100,000. That is, FOS’s complaints file for 2016/17 shows that for every 100,000 Amex card customers the number of disputes was 38.6.

Consumer loans. In the consumer lending loan market the financial institution with the highest chance of a dispute was Rapid Loans, with a rating of 88.7.

Other lenders whose chance of a dispute was relatively high included Capital Finance, at 83, Latitude Personal Finance (formerly GE Money), at 81.7, HSBC (76.1) , Toyota Finance Australia (63.7) and Mercedes-Benz Financial Services Australia (62.1).

Credit cards. Among credit card providers, American Express had the worst dispute rating, at 38.6.

Other card issuers with relatively high dispute ratings were HSBC, at 29.5, Bank of Melbourne (22), Latitude Finance Australia (19.3), Bankwest (18.3) and St George Bank (14.7).

Home Building Insurance. QBE Insurance Australia had the highest chance of a dispute in this segment, with a rating of 45.7.

It was followed by AAI Limited, at 41.7, Westpac General Insurance (38), Auto & General Insurance Co (37), Guild Insurance Ltd (36.7), WFI Insurance (33.6) and Commonwealth Insurance (30.7).

Home Contents Insurance. The Hollard Insurance Company had the highest chance of a dispute in this category, with a rating of 13.

Others with relatively high dispute ratings include Westpac General Insurance, at 8.9, AAI Ltd (8.2), Auto & General Insurance Co (7.3) and RACQ Insurance (7.2).

Housing Finance. The mortgage lender with the highest chance of a dispute was Bank of Queensland, with a rating of 79.

Others mortgage lenders with relatively high dispute ratings include Suncorp Bank, at 53.2, Bankwest (45.6), HSBC (44), Bendigo and Adelaide Bank (39.9), AMP Bank (38.4) and Rams Financial Group (37.4).

Motor Vehicle Insurance. Among motor vehicle insurers, AI Insurance Holdings had the highest dispute rating, at 109.5.

Other insurers in this category with relatively high dispute ratings include Progressive Direct Insurance, at 78.6, Hollard Insurance Co (54.1), Lloyd’s Australia (43.5) and WFI Insurance (37.1).