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Insight summary: complaints resulting from Covid-19 and the impact on consumers and SMEs
On this page we share an overview of some of the key themes we’ve seen relating to the Covid-19 (coronavirus) pandemic.
Covid-19 has given rise to many new and complex questions of fairness. Since the early days of lockdown in March 2020 – to the time of publishing in August – we’ve heard from consumers and small and medium enterprises (SMEs) about situations we couldn’t have anticipated before the pandemic.
While some of the cases we’ve seen turn on issues and circumstances not seen before – many are issues we’ve seen before, that have been made worse by the pandemic. For example, we’ve long been able to look at complaints from people who find themselves unable to repay a loan, but the pandemic has meant people who’d not previously faced financial difficulties are now doing so, while some who were already struggling are finding things even more difficult.
We’ve heard how consumers have been affected by the leisure and travel industries’ handling of cancelled holidays and events – and of course how the lockdown has affected small businesses who haven’t been able to trade.
Covid-19 in numbers:
So far in 2020, we’ve seen more than 3,500 complaints related to Covid-19. Below is a breakdown of the products the complaints were about.
Trends we've seen:
Consumers in debt or financial difficulty
Many people have found themselves in unexpected financial difficulty as a direct result of Covid-19. Others have found that Covid-19 has made things that were already difficult much worse. In March 2020, the Financial Conduct Authority (FCA) put measures in place to help provide some temporary relief on repayments on products such as credit cards, loans and overdrafts.
Even so, we started to hear from people who told us they had fallen into arrears on payments for financial products, and some said they could no longer afford their monthly payments for insurance policies. We also received complaints from consumers telling us they had been declined a payment deferral arrangement, or that there were problems setting this up with their bank or lender.
Impact on small and medium-sized enterprises (SMEs)
Following the introduction of the national lockdown in March 2020, we heard from SMEs complaining that they didn’t have cover under their business interruption insurance policy to make a successful claim. These issues have been far-reaching and the complexities involved in some of the cases prompted the FCA to take a test case to the courts. The outcome of the test case is likely to inform how we consider relevant complaints.
A package of emergency support for businesses was introduced on 17 March 2020, including the Coronavirus Business Interruption Loan Scheme (CBILS) for SMEs. On 27 April, a further business lending scheme was announced, the Bounce Back Loan Scheme (BBLS), targeted at sole traders and small firms.
From the middle of May onwards, we started to see complaints about financial business in relation to these schemes. Some SMEs told us there had been delays in processing their application or in releasing the funds, while others said their applications for these loans had been declined – especially if they were new customers of the bank.
Cancellations
As airlines cancelled flights, and lockdown meant people couldn’t travel, we heard from people having difficulty getting refunds from hotels, airlines and holiday operators. Some concerned consumers found themselves stranded abroad unable to travel back to the UK, and travel companies and airlines started going into administration.
The majority of travel insurance complaints referred to us since March 2020 have been about how insurers have been handling claims for cancelled holidays as a result of Covid-19. Other consumers looked to get their money back for cancelled holidays from their bank by making a claim under Section 75 of the Consumer Credit Act. The increase we saw in complaints about unsuccessful claims made under Section 75 reflected this, but also where consumers tried to get their money back for sports fixtures or concerts that could no longer be staged.
We’ve seen an increase in complaints about wedding insurance, as people contacted us unhappy with how their insurer had handled their claim after they had to cancel or postpone their wedding due to the impact of the virus.
Lockdown causing business disruption
When the national lockdown began, many of those who were able to work from home did so. This had a significant impact on the services that financial firms were able to offer customers as they themselves adjusted to having to work very differently – in some cases having to set up new technology infrastructure almost instantly. Though the restrictions created by lockdown have begun to ease, businesses continue to respond to operational challenges created by the changing landscape.
At the height of lockdown, we heard from consumers whose claims for damage to property or vehicles were unable to be processed, as businesses were unable to send someone to inspect the damage. Similarly, we heard from people whose mortgage application or property sale couldn’t go ahead because surveyors were unable to access properties.
As bank branches across the UK also closed, we had complaints from consumers saying they weren’t able to access financial services because they didn’t use online banking.
Although many financial service providers were able to get up and running quickly following lockdown, some firms were only able to offer reduced opening hours on their phone helplines. This created delays in processes being carried out, and consumers complained to us about issues such as requests for pension transfers that hadn’t been carried out.
The operational disruption caused by lockdown also created delays in financial firms being able to respond to complaints.
In the complaints we’ve received related to Covid-19, we’ve been applying our well-established approach to new circumstances to help get answers to consumers and businesses, and where needed we’ve been making decisions on what fairness looks like for new issues we’ve not seen before.
The fact that we will only get involved in a complaint after a business has had a chance to resolve the situation, means it’s likely we’ll continue to see cases related to the initial impact of Covid-19 arising for some time to come.
Looking forward, it’s likely the nature of Covid-19-related complaints we see will change. The immediate insurance issues are likely to ease up, but we may start to see more people facing financial difficulties, especially as deferral arrangements come to an end.
We will continue to share our insight and approach with businesses on Covid-19-related issues, working with financial businesses and our full network of stakeholders.
