The Financial Ombudsman Service wants to publish data on the number of complaints made about different financial services companies. This is an excellent idea.
Naming and shaming corporate financial wrongdoers is all the fashion these days, but why stop at greed-addled investment bankers?
Just about every nook and cranny of the personal financial services sector has been found guilty of sharp practices in recent years, as witnessed by the ever-lengthening tally of mis-selling scandals: pensions, endowments, FSAVCs, split-capital investment trusts, precipice bonds and payment protection insurance (apologies if I've missed any, it's hard to keep up.).
But that isn't the only danger facing consumers, every year tens of thousands find themselves miserably entangled by pernickety small print, lousy service and shoddy complaints procedures.
Last year, the Financial Ombudsman Service, which settles disputes between consumers and financial companies, received a record number of complaints.
Mortgage and banking disputes tripled, insurance disputes doubled. Overall, it handled 123,089 new complaints, a 30% increase, despite a 70% fall in the number of endowment cases. And that was in a year when it had been expecting the number of complaints to fall.
Complaints about current account charges rose tenfold and PPI sixfold, while motor and household insurance complaints all increased.
Wouldn't it be nice.
Have you ever thought how nice it would be if you could see exactly which companies generate the most complaints and take longest to solve them, before you buy any products from them?
Well that's exactly what's going to happen.
Last week, the Ombudsman released its proposals for publishing data on the full-blown complaints (rather than initial enquiries) it handles about financial services companies.
This followed an independent report by Lord Hunt of the Wirral, published in April, which recommended putting information on how individual financial businesses handle complaints into the public domain.
The data will be published on a six-monthly basis in table form, setting out the company name, the number of complaints received, the percentage of complaints dealt with in four weeks, four to eight weeks, and over eight weeks, the percentage of complaints upheld by the Ombudsman, and the amount paid in redress.
And it won't stop there. Businesses registered with the FSA are already obliged to submit data on complaints and outcomes, and the FSA is now looking at how to publish that data in future.
Win, win and win again.
As a journalist, it is clear that this is going to be great fun. Now we're going to have solid evidence of which companies generate the most dissatisfied customers, and how quickly they settle their grievances. We'll have a field day, especially given that the biggest names are likely to number among the worst offenders. Hooray for us.
More importantly, it should also be great news for consumers, because they can check a company's complaints records before buying any of its products. It also forces companies to pay great attention to their business reputation, which should improve practices across the market.
It's often been said that you never know how good an insurance company is until the time comes to make a claim - and of course by then, it is too late to go to a competitor. The new Ombudsman data should change that.
Name and praise.
The Ombudsman makes it clear this isn't just about naming and shaming. The tables will disclose good as well as bad performance, and that will be just as valuable to consumers (although you can guess who will grab all the headlines).
Companies offering good service will benefit, and deservedly so. So it's a win-win-win situation, with only one loser, companies with lousy service. But they will now have a powerful incentive to clean their act up, and start handling complaints swiftly, otherwise their name will be mud. Very public mud.
In fact, it's hard to find any convincing arguments against publishing complaints, provided the information is accurate and readily understood. Lord Hunt of the Wirral couldn't find any.
But it's a shame companies need a public lashing to sharpen up their act. The Ombudsman has published anonymised data on the top 11 financial services companies for several years, but acknowledges this hasn't worked: the very best and very worst companies have clung onto their respective positions for each of the past five years. It will be interesting to see if that changes. My betting is it will.
They name and shame in Spain.
Price comparison services, such as those offered on Fool.co.uk, have given consumers the power to compare the market for a host of financial services, to help them find the best value.
Until now, too many happy shoppers base their final decision on one single criteria, price, which can be misleading. Cheap isn't always best.
This new information on complaints should help them come to a more informed decision, because they should be able to gauge the likely quality of service they going to receive from their new company.
It might also forestall any dash towards insurance becoming a low-cost, homogenised and commoditised product.
The Ombudsman is waiting for comments on its proposals, to a deadline of 24 December 2008. The first set of data will can hope to get our hands on will be for the six months from July to December 2009. So we have to be a little patient.
It isn't really a radical move. Spain, Finland, the Czech Republic and Poland have got there before us. In fact, I have only one quibble: what took them so long?
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