The Financial Ombudsman Service plans to take on 1,000 staff this year to deal with a surge of complaints relating to mis-sold payment protection insurance (PPI).
The expansion comes on top of the 1,000 it hired last year, when it increased its number of case workers to 2,500.
Deputy chief ombudsman Tony Boorman said: “While we see some businesses using complaints positively, many continue to frustrate their customers with delays and inconvenience. This has a marked impact on our workload.”
The ombudsman expects to handle 385,000 new cases in the 12 months from April, including a record 245,000 complaints relating to the mis-selling of PPI policies, which were meant to protect borrowers who found themselves out of work because of sickness or redundancy but were often sold to customers who did not want or need them.
It expects to deal with 2.2 million calls, and will respond to a shift towards more complex and harder-fought cases by increasing the number of ombudsmen to deal with entrenched disputes requiring a final decision.
The service is planning to raise its case fees by 10 per cent to cover the increase in costs.
Craig Lowther, managing director of claims management company MoneyBoomerang, said it was a disgrace that the ombudsman has been put in such a position.
“When you think that roughly 90 per cent of cases put through to the Financial Ombudsman Service come down in favour of the customer, why are the banks not doing the right think and just paying up?” he asked.
Britain’s banks have already set aside more than £12 billion to compensate customers mis-sold PPI and are struggling to cope with a backlog of complaints. Some in the industry believe that the final figure could top £25bn.