Consumer complaints to banks about their products and services fell by half a million in the first six months of this year, compared to the last six months of 2012.
Overall, 2.9 million customer gripes were recorded between January and June, down from 3.4 million in the previous six months, according to new figures released by City regulator the Financial Conduct Authority (FCA).
Driving this decrease was the first-drop off in complaints about payment protection insurance (PPI) seen in three years – although it has now dealt with one million such cases, and is still seeing up to 10,000 PPI complaints a week.
PPI was sold to people to help them cover their loan payments after a loss of income, for example if they fell ill or lost their employment.
But a widespread mis-selling scandal later emerged, with some people finding they had taken out the insurance without realising it or saying they felt under pressure to do so.
Banks have also been criticised by the ombudsman service in the past for dragging their heels over complaints, and leaving the ombudsman to sort out consumers' PPI gripes instead.
As recently as July, chief financial ombudsman Natalie Ceeney was criticising signs of bad practice in PPI complaints handling procedures, which she said were adding to “an atmosphere of universal suspicion and distrust” among consumers.
But now, finally, it seems as though the PPI mis-selling storm may be starting to die down. Just under 1.8 million new PPI cases were opened in the first half 2013.
While this is still a large number, it marks a drop of almost one fifth (18%) from the peak of 2.2 million complaints received in the previous six months.
Until the release of the latest figures, complaints made to financial firms about PPI had been steadily rising each half-year since around 2010.
Ian McConnell, a financial services partner at the firm PwC, says the fall in complaints indicates that the industry is getting on top of its issues.
McConnell says: “This is a good outcome for customers as well as banks. It demonstrates that the number of customers with concerns is reducing, albeit from a significant base. In addition, if this trend continues banks will be able to divert more attention to servicing their customers going forward rather then constantly looking back.
“In particular the numbers would suggest that the back of the PPI issue has been broken and is now on a downward trend with banks getting through complaints more efficiently.”
The FCA's figures also show that banks are clearing up complaints generally at the fastest rate since similar records began. Nine out 10 (92%) of complaints made to financial services firms were dealt with within eight weeks, marking the highest proportion seen since records began seven years ago.
For their part, banks have promised there will be no return to the bad practice and mis-selling scandals of the past. The British Bankers Association (BBA) has said the figures are “encouraging".
A spokesman for the BBA says: “Banks continue to improve their products and services, and have placed their customers at the centre of everything they do. Staff are now rewarded for high levels of customer service and not sales volumes.”
So, while high levels of PPI complaints continue to be received, it looks as though there is finally a chink of light at the end of the tunnel. Richard Lloyd, chief executive of Which?, reminds us that while the fall in complaints is “welcome”, there is still much more work to be done and the figures are “still far too high”.
He hopes new rules introduced in September to make it easier to ditch your old current account provider and switch to a new one will also force banks to up their game and work much harder to satisfy consumers.
The switching guarantee has cut the length of time it takes to change banks from up to 30 working days to seven and all outgoing and incoming payments now move over automatically with the consumer.
Lloyd says: “We want banks to deal with complaints swiftly and fairly and to explain what steps they are taking to stop the same problems occurring in the future.
“We hope the introduction of the new faster switching guarantee will force banks to compete for customers, improve their customer service and offer better products."