Insurance-related complaints up 19% - FSA

Data released by the regulator showed complaints about misleading advice have increased from 158,311 in the first half of last year to 207,967 this year. The data is split into five different product groups covering: banking, loans, pensions, investments and protection.

The steepest rise in complaints was seen over arrears handling, reporting an increase of 41 per cent to 39,181.

However, the greatest number of complaints was for general insurance and pure protection, including payment protection insurance, where 334,443 complaints were made, an increase of 19 per cent. This was a 72 per cent rise in the number of complaints compared with the first half of 2006.

However, the proportion of complaints upheld by firms fell slightly from 40 per cent to 38 per cent, the regulator said in its data this was largely attributable to a fall in the number of complaints upheld by banks

Tony Byrne, managing director of Buckinghamshire-based IFA Wealth and Tax Management, suspected not many of these complaints were against IFAs.

He said: "Most of these are against insurance companies and banks because they are still selling products that should not be sold.

"The FSA allowed PPI to be sold and then it decided it was mis-selling and I think that the product was wrong and has been for a number of years. One of the big reasons complaints arise is because it encouraged by the regulator - because it keeps them big. I am quite cynical about the whole thing."

Mr Bryne said while the quality of advice is increasing, advisers have to deal with increased regulation, such as treating customers fairly.

He said: "Insurance companies and banks should come under TCF. IFAs build long-term relationships with clients, not customers. There have been more complaints with investment performance going down and we have become a more litigious society."

David Barnett, principal of Middlesex-based DPB Independent Financial Services, said the FSA made it too easy for the public to complain or the complaints management company to complain on the public's behalf.

He said: "There should be a modest deposit, and if the complaint is upheld they should get their money back and if it is not it should be put towards costs.

"Some complainants hope that they get money for nothing. The FSA is bending over sympathetically with the public and there is no balance between the responsibilities the adviser has and the member of the public has. The simplest way is for the public to forfeit money if the complaint is not upheld."