Complaints against mortgage businesses, including brokers, more than doubled year-on-year in the second half of 2010, with redress paid out by them tripling to over £15m, according the latest FSA figures.

Mis-Sold Mortgages

Mortgage businesses received 29,274 complaints in H2 2010 compared to 13,232 in H2 2009. The FSA revealed that almost 25,000 of these complaints were closed, with 48% upheld.

The redress that mortgage businesses paid out for the second half of 2010 totalled £15.2m compared to £5m for the same period of 2009.

For the whole of last year, mortgage businesses paid out £28m in redress.

However, the amount of redress that related specifically to home finance products almost halved year-on-year to £5.7m compared to £11m in H2 2010.

In addition, complaints about regulated home finance products dropped 27% year-on-year in H2 2010 to 48,732. Complaints about equity release deals totalled just 633, but this was up from 383 in H2 2009.

Overall, complaints about home finance products, which include regulated and unregulated products and equity release, were 64,221 in H2 2010. This was up from 57,963 in the first half of the year, but 20% down year-on-year from 80,230 in H2 2009.

Of these complaints about products, 48% were upheld.

The advising, selling and arranging of home finance garnered 7,421 complaints in the second half of 2010, making up 12% of all complaints relating to home finance. Meanwhile, arrears-related complaints accounted for just 3% of all complaints, of which 9% or 5,534 were about home finance.

Nevertheless, the complaints against mortgage businesses paled in comparison to the 1.3m that were received by banks and building societies for the latter six months of 2010, with 1.26m closed and 51% upheld.

Yet, this was a significant fall on the 2.2m complaints received by lenders in H2 2009.

The Bank of Scotland, Barclays Bank and Santander took the top three spots for most complaints about home finance.

The Bank of Scotland had most complaints at 9,631 in H2 2010; 10,886 complaints were closed during the period and 47% were upheld.

Coming in second was Barclays Bank with 8,580 complaints, with 7898 closed and 61% upheld, followed in third by Santander with 8,451 complaints, with 10,195 closed and 41% upheld.

Of the other big mortgage lenders, HSBC had 3,658 complaints about home finance with 47% upheld, Nationwide received 2,447 with 46% upheld, and the Royal Bank of Scotland received 2,127 home finance complaints with 80% upheld.

Meanwhile, there was a marked difference between the good and bad Northern Rock banks.

Northern Rock Asset Management receiving 2,499 complaints on home finance, with 1,791 close and 34% were upheld, while Northern Rock plc took 453 complaints, with 466 closed and 41% upheld.

However, complaints about general insurance and pure protection saw by far the most complaints, rising 37% to 710,678, of which 454,193 were as a result of the advising selling and arranging process.

Lloyds TSB topped the lenders with the most complaints for this area, with 84,775 received in H2 2010 and 68% upheld by the bank.

Barclays Bank and Bank of Scotland came second and third for GI and protection complaints, with 59,003 (68% upheld) and 49,566 (72% upheld) received in the second half of 2010.

Total complaints relating to financial services rose by 3% in the second half of 2010 to 1.8m.

Redress reduced 11% to £454m, a large proportion of which was paid for complaints relating to payment protection insurance.

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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.