6. Consumer complaints
Data gathered through consumer complaints about financial products and services can signal gaps in financial consumer protection frameworks and highlight areas that may need to be addressed by policymakers and regulatory and supervisory authorities tasked with administering and enforcing financial consumer protection laws, regulations and other measures. This chapter reports data on consumer complaints in five product markets: banking and payments, credit, insurance, investments and pensions.
An important component of financial consumer protection frameworks are accessible and efficient recourse mechanisms that address and resolve consumer complaints. Principle 12 of the G20/OECD High-Level Principles on Financial Consumer Protection notes that financial services providers and intermediaries should have in place mechanisms for complaints handling and redress. In instances where complaints are not resolved by the internal dispute resolutions mechanisms of providers and intermediaries, consumers should have access to an independent redress process. Finally, the Principle recommends that aggregate information on consumer complaints and their resolutions should be made public.
Data gathered through consumer complaints about financial products and services can signal gaps in financial consumer protection frameworks and highlight areas that may need to be addressed by policymakers and regulatory and supervisory authorities tasked with administering and enforcing financial consumer protection laws, regulations and other measures. At the same time, complaints data are not fully representative of all consumers, since socio-economic characteristics and personality traits may make certain consumers more likely than others to file complaints (CGAP, 2022[1]). Furthermore, a rise in the volume of complaints does not necessarily indicate an increase in consumer detriment. It can also signal greater consumer awareness of the complaints and redress mechanisms available to them or a strengthened trust in the efficacy of such systems.
The reporting template surveyed jurisdictions about the top five subjects of consumer complaints in five product markets: banking and payments, credit, insurance, investments and pensions. The complaints data were further categorised by the recipient of the complaint: firms, alternative dispute resolution schemes (ADR) and supervisory authorities.
This chapter first presents aggregate trends in the volume of consumer complaints received by firms, ADR schemes and supervisory authorities from 2021 to 2022. Next, the chapter discusses the top five subjects of consumer complaints in each of the five product markets. It should be noted that in most jurisdictions, consumers are required or encouraged to initially file a complaint directly with their financial service provider (i.e. firms). If the issue is not resolved, then the consumer can escalate the problem to an ADR scheme or in certain cases to a supervisory authority. In some jurisdictions, consumers can file complaints directly with the supervisory authority as well. Finally, for the sake of simplicity, the reporting template collected data on the subject of complaints (i.e. what went wrong) rather than the specific product or type of provider involved.
The total volume of consumer complaints increased in the majority of reporting jurisdictions in 2022 compared to 2021, as shown in Figure 6.1. In around three quarters of responding jurisdictions, complaints filed directly with firms or with alternative dispute resolution mechanisms increased. Complaints filed with supervisory authorities increased in a slightly lower share of jurisdictions: around 60%. The remainder of this chapter provides detailed data on trends in consumer complaints in each sector.
Notes: Data was provided in response to a question asking jurisdictions to indicate whether the total number of complaints received from consumers (across all products and sectors regulated) increased, stayed the same or decreased in 2022 compared to 2021. For this question, 15 jurisdictions provided an answer regarding complaints received by firms, 12 regarding complaints received by ADR mechanisms, and 22 regarding complaints received by supervisory authorities.
Source: OECD Consumer Finance Risk Monitor Reporting Template 2023.
Note: Horizontal bars correspond to the number of respondents who ranked this subject of complaints among the top five in their jurisdiction in 2022.
Source: OECD Consumer Finance Risk Monitor Reporting Template 2023.
As shown in Figure 6.2, across firms, ADR schemes and supervisory authorities in the banking and payments sector, the most common subject of consumer complaints was about specific transactions, transfers and payments. Among complaints received by ADR schemes and supervisory authorities, the second most common subject of consumer complaint was scams and frauds followed by complaints regarding fees and charges or poor value for money. Scams and frauds were less commonly the subject of complaints lodged directly with firms.
Table 6.1 presents data on the average change in the number of consumer complaints in the banking and payments sector between 2020 and 2022, split by the recipient of the complaint. Notably, the volume of complaints increased in both years and across all three recipients (firms, ADR schemes and supervisory authorities).
Note: Horizontal bars correspond to the number of respondents who ranked this subject of complaints among the top five in their jurisdiction in 2022.
Source: OECD Consumer Finance Risk Monitor Reporting Template 2023.
As shown in Figure 6.3, debt collection was among the top subjects of complaints received by ADR schemes and supervisory authorities in the credit sector. Fees/charges and poor value for money ranked as the top subject of consumer complaints received by firms and was tied with debt collection among complaints received by supervisory authorities. Quality of customer service ranked second among complaints to firms. Jurisdictions submitted the following subjects under the “Other” category: interest charges, disputes regarding individual transactions and outstanding amounts, credit approval and credit limit issues as well as debt restructuring.
Table 6.2 presents trends in the number of consumer complaints in the credit sector between 2020 and 2022, by recipient of complaint. The number of complaints to firms decreased marginally in 2021, and again in 2022. Complaints to ADR schemes grew slightly in both years, while complaints to supervisory authorities decreased overall.
Note: Horizontal bars correspond to the number of respondents who ranked this subject of complaints among the top five in their jurisdiction in 2022.
Source: OECD Consumer Finance Risk Monitor Reporting Template 2023.
As shown in Figure 6.4, the top two subjects of consumer complaints across firms, ADR schemes and supervisory authorities in the insurance sector were claims handling and contractual clauses (including exclusions). It should be noted that complaints from consumers may be characterised as related to “claims handling” once their claim is denied – but the underlying problem may not stem from the claims handling process itself. Instead, it could result from poor product design, low value for money, poor target marketing mis-selling, among other reasons. Quality of customer service ranked third for complaints to supervisory authorities. Complaints related to claims handling involved claim amount issues (including disagreements about the valuation of damages), delays in claims handling and rejection of claims. Consumers also filed complaints related to underwriting practices, creditor insurance, product features and lapsing of policies (e.g. a claim is denied because the insurer claims the policy has lapsed).
Table 6.3 sets out trends in the number of consumer complaints in the insurance sector between 2020 and 2022. In general, the number of complaints fell over the time period, except for complaints to ADR schemes and supervisory authorities in 2021, which grew by 19 and 7% respectively.
As shown in Figure 6.5, the top subjects of consumer complaints to firms in the investment sector were problems managing investments, problems related to fund withdrawals and advice and mis-selling. The most common complaints filed with ADR schemes and supervisory authorities related to advice and mis-selling and lack of disclosure of information.
Other complaint categories included the execution of orders, failure to follow instructions, unlicensed activities and market misconduct (i.e. alleged market manipulation and insider dealing).
Note: Horizontal bars correspond to the number of respondents who ranked this subject of complaints among the top five in their jurisdiction in 2022.
Source: OECD Consumer Finance Risk Monitor Reporting Template 2023.
Table 6.4 shows average changes in the number of consumer complaints in the insurance sector between 2020 and 2022. The number of complaints received by firms increased in both years while the number of complaints received by ADR schemes fell. Complaints received by supervisory authorities increased overall, despite a small decrease in 2022.
As shown in Figure 6.6, quality of customer service, fees/charges and advice were the top subjects of consumer complaints to firms in the pensions sector.1 Complaints to ADR schemes and supervisory authorities frequently concerned fund withdrawals. Other complaints included contribution-related disputes and account administration errors, enrolment issues, transferring retirement funds, retirement annuities, delays in claims handling/ management and contract termination conditions. In addition, certain consumers in Romania had requests for information on the mandatory pension fund to which they had been randomly allocated. In Mauritius, the Financial Services Commission received complaints from private pension scheme members that they were receiving contradictory information from different insurance companies with respect to benefit payments; the Financial Services Commission conducted research on this matter and referred one insurance company in breach of the law to the enforcement directorate.
Note: Horizontal bars correspond to the number of respondents who ranked this subject of complaints among the top five in their jurisdiction in 2022.
Source: OECD Consumer Finance Risk Monitor Reporting Template 2023.
References
[1] CGAP (2022), Market Monitoring Toolkit: Analysis of Complaints Data, https://www.cgap.org/research/publication/market-monitoring-tool-analysis-complaints-data.
Note
← 1. Too few responses were provided via the reporting template to be able to calculate a sufficiently representative average change in the number of complaints in the pensions sector, by recipient of complaint. Thus, the table that appears in prior sections of this chapter was not reproduced for this section on the pensions sector.