BANK RAGE; Tide of anger as more families get rough deal.

Byline: GRAHAM HISCOTT

COMPLAINTS about banks giving customers a raw deal have jumped almost a hundred-fold since the credit crunch erupted.

Unemployment and wage cuts have made life a misery for millions of families. But Britain's big banks stand accused of worsening the situation by dealing harshly with struggling customers.

Figures provided to Your Money by the Financial Ombudsman Service reveal a shocking increase in complaints.

In June 2007, the service dealt with just 15 cases of banks and other providers leaving customers in "financial hardship".

By June last year, the number was 87 but, since then, it has rocketed - passing the 1,100 mark last month. David Cresswell, from the ombudsman service, says: "This rise reflects the impact of the recession on consumer finances, with unemployment and tighter budgets making the potential fall-out from a disagreement with a bank or insurance company all the greater."

The industry Banking Code states that providers should deal with customers in trouble "sympatheti-calland positively". Yet evidence on the ground tells a different story, prompting the recent Treasury White Paper to call on the banks to treat complaints more seriously or risk stiffer penalties and being named and shamed.

"Failure to resolve a problem can have a disproportionate impact in direct costs, loss of business and goodwill to the industry as a whole," it said. A good illustration of this is unfair banking charges, which is still rumbling through the courts with banks fighting tooth and nail to resist attempts to curb their charges. While that legal battle drags on, the number of people who say that these penalties have left them unable to pay other bills like council tax and energy, or the mortgage has shot up due to the recession

Banks are also keeping quiet about help that's available. Most bank charge claims may be on hold but, as Your Money recently reported, the Financial Services Authority is forcing banks to deal immediately with those in financial difficulty.

Not surprisingly, banks aren't shouting from the rooftops about it. They're behaving equally badly when it comes to payment protection insurance - still the ombudsman's biggest area of complaint.

The past few months has seen a sharp increase in people who say the cost of PPI, or the lack of a payout, has tipped them over the edge financially. It's not just banks at fault... Insurance firms are also in the line of fire for coming down too hard on customers.

The ombudsman says insurers are lowering the limit where they demand additional proof of ownership, such as a receipt.

They're also turning down more claims, forcing the victim to pay to replace stolen goods out of their own pocket.

For those rejected it's an added cost, when they can least afford it. Cresswell adds: "Another issue we have had, and the banks are particularly poor, is telling customers about the ombudsman within eight weeks of making a complaint.

"Forty per cent of the complaints we see have far exceeded that but the consumer was not told.

"The banks should know. It has been 10 years since they've been required to meet the eight-week maximum." The ombudsman service has had to recruit an extra 250 staff to deal with the surge in complaints.

While it doesn't have a magic wand to solve clients' money problems, it can ease some of the pressure.

For example, it can force a bank to switch a customer with a costly overdraft to an interest-free loan.

In the face of such threats, banks are taking an increasingly tough stance to protect profits.

The ombudsman has seen a marked rise in lawyers trying to find legal loopholes to avoid payouts. Nonetheless, it is proving successful in resolving disputes.

In seven out of 10 banking cases it has forced banks to agree a deal they'd previously refused.

With unemployment set to break the 2.5 million mark next month, banks will be under ever more pressure to offer sympathetic solutions.

But with providers looking to claw back big losses, customers may be left holding their breath.

HOW TO COMPLAIN...

The Financial Ombudsman Service can only formally step in eight weeks after you've complained to your bank, insurer etc. However, if you don't know who to contact at the provider, the service will do it for you.

Call the ombudsman on either 0845 080 1800 or 0300 123 9 123 (if you're worried about the cost, they'll phone you back). Or email complaint. info@financial-ombudsman. org. uk. Finally, you can write to the service at South Quay Plaza, 183 Marsh Wall, London, E14 9SR.