The Ombudsman for Banking Services and Investments is reporting a large jump in complaint volumes, and warns that the industry isn’t handling complaints properly in some cases.

In a newsletter published Thursday, OBSI reports that it has opened up more files in the last 10 weeks than in did for all of 2006. “Having come off of two years in a row of huge growth, we are without doubt headed for another record year,” said the letter from outgoing ombudsman, David Agnew.

“We have started to see cases on the investment side reflecting the downturn in the markets, with suitability complaints continuing to lead the way and leverage (borrowing-to-invest) files re-emerging as a significant category of dispute,” he notes. “On the banking services side, complaints about prepayment penalties are growing as consumers look to refinance higher-rate mortgages and loans.”

Aditionally, OBSI said that it is also seeing signs that firms have cut back on compliance and complaints staff. “Not only is this leading to more frustrated customers, it adds to our workload. Instead of a proper response to the client, the firm has fired off a template letter dismissing the complaint, and has done none of the proper groundwork of responding to a client,” the letter says.

“While we’ve made progress, complaint-handling in financial services has a long way to go,” he adds. “The rules that governments, regulators and dispute resolution services bring in are only one part of the system, and in some ways not the most important part. At the firm level, good complaint-handling requires commitment from the top, appropriate resources and a willingness to accept that not only do mistakes happen, but they need to be acknowledged and corrected.”

IE