Interactive Investor

FOS figures show extent of Covid-19 impact on personal finances

26th August 2020 17:02

Liz Bury from interactive investor

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Rejected travel insurance claims make up 23% of Ombudsman complaints.

The impact of Covid-19 on personal finances has led to thousands of extra claims to the Financial Ombudsman Service (FOS).

The body has so far seen 3,500 complaints related to coronavirus from people unhappy with a financial company. 

The biggest chunk, 23%, came from people whose insurers did not pay out on travel insurance policies where a holiday or event was cancelled. 

Other issues include people falling into loan arrears, unable to afford monthly insurance fees, not being able to get a payment deferral or having problems setting it up.

“Covid-19 has had a huge impact on our lives, including finances,” says Caroline Wayman, chief executive of the FOS.

“Since measures to control the virus were put in place, we’ve been hearing from people who aren’t happy with how their financial provider has treated them. Some financial businesses must do more to ensure they are treating customers fairly.”

The FOS thinks insurance-related complaints will ease in the coming months, while more cases will emerge of people in financial difficulty.

The data shows people struggling to get refunds from hotels, airlines and holiday operators, while others were stranded abroad when operators fell into administration.

People whose weddings were cancelled due to the pandemic also filed complaints with the ombudsman.

Lockdown meant providers were unable to process motor and property insurance claims, or to complete property surveys.

Complaints emerged about shut bank branches where customers do not use online banking. 

Other Covid-linked difficulties included delays to pension transfers and disruptions to providers’ own complaints procedures.

At the same time, the FOS published data on total complaints for the quarter April to June, showing 57,509 new cases. It upheld 32% of the ones it has resolved so far.

There was a spike in complaints about guarantee loans, up 177% to 1,017, and doorstep loans, higher by 77% at 1,166, with uphold rates running at 85% and 86% respectively.

Because the ombudsman gets involved only after the provider’s own complaints procedure has completed, it thinks coronavirus-related cases will continue in the months ahead.

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