'There are some very tick-box attitudes to compliance in some banks'

The financial ombudsman's workload may have broken through one million cases last year, but there are signs that some parts of the financial services sector are starting to offer a better service to their clients.

Complaints about payment protection insurance (PPI) accounted for 51 per cent of new cases, as revealed in the ombudsman's annual report for 2010-11, published on Wednesday. But now that the banks have caved in, setting aside an estimated £9bn to pay compensation to customers who were mis-sold PPI policies, it could be that some will take steps to avoid repeats.

The new chief executive of Lloyds, Antonio Horta-Osorio, is aiming to cut the number of complaints it receives as a way of demonstrating that the group, comprising Lloyds and Halifax/Bank of Scotland, is "committed to improving the quality of service we give our customers".

Natalie Ceeney, the chief ombudsman, is constantly meeting bank and other chief executives and says several are committed to changing their cultures to reduce mis-selling and improve the handling of complaints.

While the number of cases the ombudsman had to resolve through its adjudicators went up 26 per cent in 2010-11, there were areas where the figures fell. Complaints about bank account management and other general banking issues fell nine per cent. Health insurance grievances were 13 per cent lower. "The travel insurance industry did very well," says Ms Ceeney, referring to the fact that only 700 cases had to be decided in relation to the volcanic ash problem.

Essentially, the difference between organisations which receive high numbers of complaints and those that do not is one of culture, says Ms Ceeney. "There are some very 'tick-box attitudes' to compliance in some of the banks," she says. "In those places, staff are asking themselves: 'What do the rules allow me to do and what can I get away with?'."

This would have been the approach behind the PPI mis-selling scandal which may have affected more than three million people. Those consumers typically paid more than £2,000 in premiums for insurance policies which were of little use to them. On the other hand, Ms Ceeney points to firms which deliver good customer service and have lower complaints rates. These, she says, "treat complaints as insight, showing them how they can improve".

Just over half (51 per cent) of complaints received by the ombudsman last year came from four financial institutions – the "big four" banks. Even here, however, the figures varied substantially from group to group. Lloyds TSB won only 26 per cent of the cases decided by the ombudsman in the second half of 2010. At the other end of the spectrum, HSBC won 73 per cent. In between were Royal Bank of Scotland, with 40 per cent and Barclays on 46 per cent.

The best performers included Guardian Assurance and National Savings and Investments (winning 87 per cent of cases), Bradford & Bingley (86 per cent), Yorkshire Building Society (85 per cent), Equitable Life (82 per cent) and the Prudential (80 per cent).

Many parts of the insurance industry have lower complaints rates than sectors such as banking. This may be because competition is so intense. While people frequently change their household insurance provider, they are much less likely to switch banks.

But another factor could start encouraging financial institutions to stop mis-selling. Younger people who use Twitter, Facebook and other forms of social media often inform hundreds of their contacts if they have been mis-sold, while their parents might retell the story to only a handful of friends. "The potential for dissatisfaction to go viral is huge," says Ms Ceeney.

Consumers can take complaints to the ombudsman if they are dissatisfied with the outcome of a complaint they have made to a financial institution, or if they receive no reply from it. The ombudsman gave initial advice on simple queries in just over a million cases in the year to March 2011. A fifth of those queries – just over 200,000 – turned into cases for the service's adjudicators to investigate and resolve. In just over half of these applications (51 per cent), the ombudsman found in favour of the complainant and ordered the financial institution to pay compensation.