In its annual review the ombudsman revealed that it received 9,537 complaints relating to mortgage in the year ending 31 March 2012 compared to the 7,067 over the previous 12 months.
Some 16% of the complaints were against mortgage intermediaries, down slightly from the 18% in the previous 12 months.
The ombudsman said administrative errors remained the largest area of complaint.
Overall mortgages made up 3% of all the complaints the ombudsman received, the third lowest sector out of the 12 sectors recorded.
Over the course of the 12 months to March the ombudsman saw more cases where consumers were disappointed when their own lender’s reduced range of available mortgages made it necessary for them to move to another lender in order to get a mortgage at a better rate.
Complaints about being turned down for a mortgage often also included dissatisfaction with the explanation – or lack of explanation – that the lender gave about why the mortgage application was not successful.
The FOS also continued to see disputes about decisions by lenders to reduce significantly the upper age limit applying to the term of the mortgage or to require the consumer to provide proof of their income in retirement, or to show how they intended repaying the mortgage after they retired.
It also saw complaints during the year from consumers who either wanted or needed to let their property and were unhappy with the increased interest rate or administrative charges that their lender applied as a condition of agreeing to the letting.
Complaints about the handling by lenders of mortgage arrears continued to form a significant part of the ombudsman’s work. This included complaints about arrears charges applied by some lenders and complaints about the inflexibility of lenders in arriving at a plan to manage the arrears in a way that fitted the consumer’s circumstances.
Overall the ombdusman received over 1.2m front line enquiries and complaints from consumers over 5,000 each working day of which a record 264,375 enquiries were turned into a formal dispute, up 28% on the previous year.
Richard Lloyd, executive director of Which? said: “The record increase in the number of new complaints going to the Financial Ombudsman shows that too many financial institutions are still failing to treat their customers fairly when things go wrong.
“The fact that over 250,000 people took their problem to the Ombudsman this year is further evidence that banks and insurers must transform the way they handle complaints.”
