The Australian Bankers' Association (ABA) said there was a low rate of complaints against banks in information released today from the Financial Ombudsman Service (FOS).

The FOS today issued its annual review covering the 2009-2010 financial year (1 July 2009 - 30 June 2010) and, for the first time, has published tables showing dispute data for individual financial service providers.

The FOS offers dispute resolution services to the customers of many financial service providers including banks, credit unions, insurers, financial planners, non-banks, superannuation trustee/advisors, mortgage brokers and originators etc.

Steven Münchenberg, Chief Executive of the ABA, said: "The data show that overall complaint rates for banks are low when looking at the rates per 100,000 customers and the vast majority of disputes were resolved very early in the process."

The FOS review relates to the period in which the Global Financial Crisis affected the financial circumstances of many customers of financial service providers and was a time when banks moved quickly to assist customers.

In 2009, banks adopted an expanded set of common principles to assist individual borrowers who faced temporary financial hardship and many banks put more resources into their teams which assist customers experiencing hardship.

Mr Münchenberg said: "It is not surprising that the FOS dealt with more complaints overall against financial service providers regarding financial difficulty. For example, in a weakening economic environment, customers may experience financial difficulty if they lose their job. Depending on a customer's individual circumstances, banks will try to help if a borrower's income is interrupted temporarily."

On publishing the new tables, the banking industry supports greater transparency that helps customers make an informed choice and banks will look with interest to see if the new FOS data will assist customers.

Mr Münchenberg said: "That being said, we do think there are some issues with the tables. The survey results will be quite complex for the average person to interpret and understand. Also, there was a significant increase in FOS membership which would have had some impact on the increase in the number of complaints."

"Complaint rates for any given product will not necessarily reflect 'like with like'. That is, not all institutions offer the same range of products. So, readers may need to do some follow-up work to understand why complaint rates vary. For example, an institution may offer only a small range of products when compared with another and institutions will have different client bases."

Mr Münchenberg said it is important that customers look at a whole range of issues when deciding what product is right for them, such as price and product features, as well as whether the FOS is handling disputes from a particular provider compared to another.

Complaints figures only tip of the iceberg

Choice, the people's watchdog, says publication today by the Financial Ombudsman Service (FOS) of tables showing the likelihood of a complaint reaching them about individual financial institutions is a plus for consumers.

The consumer group says despite the record volume of complaints recorded by the service, this is only the tip of the iceberg because most people don't get to complain to the FOS. Half of Australians are unaware that the FOS exists.

And despite the scale of customer dissatisfaction with poor service and high fees from major banks, few people are switching to more consumer-friendly institutions to get a better deal because of the hassle involved.

"The new figures will force banks to wake up and smell the crisis of consumer confidence in their industry, but it's a long way from being a clear, comprehensive, consumer-friendly guide on which banks to avoid," says CHOICE director of Better Banking Richard Lloyd.

Choice says the regulator, ASIC, should be required to go much further using available data in helping consumers know which banking brands are most likely to be bad news for anyone seeking decent customer service.

It says the data available to consumers on problems in banking still lags well behind other service sectors such as telecoms and other countries such as the UK.

Choice wants FOS and ASIC to jointly publish easily searchable bad banking league tables, clearly showing the number of complaints received by them and by the banks themselves about each of their products and services - as is done in the UK.

The consumer group said this data should be published more regularly to give consumers the chance to use up-to-date information to inform their banking decisions - at least quarterly, not annually.

It also wants the actual amount of time it takes to resolve complaints and the amount of compensation paid by each bank to resolve disputes about different products to be made public by the regulator.

Choice says there are signs that growing numbers of consumers want to make their money work harder by switching to banks that offer a better deal, but they are often deterred because they think all banks are basically the same or it is too much hassle.

"Clearer, regularly updated, widely publicised information from the regulators about which brands treat people badly, along with government action to make switching easier, will help drive a more competitive and better banking system," says Lloyd.