Morning business news - January 31Thursday 31 January 2013 09.14
FINANCIAL SERVICES OMBUDSMAN SEES BIGGEST NUMBER OF COMPLAINTS SINCE OFFICE WAS ESTABLISHED - Financial Services Ombudsman Bill Prasifka has expressed 'great concern' over the surge in complaints to his office. A record 8,135 complaints were recorded last year - the highest since the FSO was established in 2005 and an increase of 12% on 2011.
The Financial Services Ombudsman says his office is dealing with legacy issues arising out of the financial crisis. He notes that payment protection insurance complaints more than doubled in the second half of the year, while complaints about bank accounts saw a similar rise. Bill Prasifka says his office feels its work is only beginning. Mr Prasifka says his office received a surge of complaints about Ulster Bank in July after the bank's technical glitch the previous month. But he says that the issue did not result in as big a drain on the FSO's resources as had been anticipated because of the high level of engagement by the bank itself. The Ombudsman said he would like to see a similar level of engagement by the other banks in the country.
On the issue of payment protection insurance complaints, Mr Prasifka said they represented 32% of all insurance complaints in 2012, surging by 216% on 2011 figures. He says this is due to consumers' financial distress and because of the media coverage the issue has received.
Mr Prasifka repeats his view that much more needs to be done by financial institutions to engage with their customers before complaints arise. He says that while some banks have improved their complaint handling procedures, other banks are in the same position as they were five years ago. He says that banks need to act rationally over a long period of time, rather than just being resigned to poor complaint management.
MORNING BRIEFS - Drinks group Diego describes conditions in the UK and Ireland as "challenging" in its half year results this morning. The company said sales of Guinness are still falling in this part of the world and in the US.
Sales of Bushels whiskey, which Diego also owns, fared much better. They were up 28% in Ireland over the second half of last year and up 49% in Russia and Eastern Europe.
*** A new protocol has been agreed by Irish banks on dealing with unsecured debts owed by customers who are in financial distress. It could see substantial amounts of credit card and personal loan debt written off for people whose financial circumstances mean that they are no longer in a position to pay it off. Under the umbrella of the Irish Banking Federation, which covers most but not all lenders in the Irish market, banks have agreed that in appropriate circumstances, with a customer's permission, they will liaise with each other. They will agree terms so that mortgage payments will be met as far as possible or may be reduced for up to five years to enable some payment to be made towards unsecured debts. After the five year period - if the creditor's financial position has not improved - the remaining unsecured debt will be written off. This marks the first time lenders have actually agreed any co-ordinated approach on unsecured debt.
*** Facebook demonstrated some of the progress that many of its shareholders have been anxiously awaiting in generating revenue from advertising to mobile smartphone users. The social network reported a 40% gain in revenue over the final quarter of last year to $1.6 billion. Its profit for the period was down almost 80%, however, to $64m as it absorbed significant spending costs mainly from hiring new staff and investing in its mobile offering.