More than 1,000 bank and building society customers complained to the Ombudsman for the Credit Institutions over the past year. The majority of complaints (45 per cent) related to disputes arising from loans and mortgages and from the operation of accounts (28 per cent).

The ombudsman, Mr Gerry Kelly BL, in settling a number of these cases, has again set some clear messages to the institutions about what is and what is not acceptable procedure or behaviour on their part.

Complaints to the ombudsman have gone up again slightly this year (3.7 per cent), but the increase is small proportionate to the huge extra number of transactions being recorded. ATM transactions, for example, have doubled between 1992 and 1997 while credit card transactions have also doubled over the period, from 20 to 40 million.

Set up in 1990, the ombudsman's office has received about 1,000 complaints a year on average. Of the 1,033 received this year, only 71 fell outside his terms of reference (less than 7 per cent) and 683 were settled by the internal complaints procedure of the bank or building society. Of the balance, 101 cases were upheld, 147 cases were not and 31 others were settled during the course of the investigation.

A number of cases are highlighted in his annual report, and these provide a good cross section of the sorts of problems which customers are raising with banks and building societies.

Complaints against banks included one from the beneficiaries of an elderly woman's estate who discovered that she had £80,000 on deposit in a very low-interest bearing deposit account. They complained to the ombudsman that her bank manager had been negligent in allowing such a large sum to remain in such a poor yielding account when there were other, higher interest paying accounts at the bank.

The ombudsman discovered that the bank manager had tried on a number of occasions to convince the elderly customer to move her funds, but that she had resisted his suggestions. The case was not upheld.

Another case, however, which could have widespread implications for lenders concerns a couple who borrowed £15,000 in 1989 repayable at a variable rate of interest payable over seven years in 84 monthly instalments of £307.50.

At the end of the period, after meeting all their repayments, the complainants discovered that they still owed £2,300. The bank explained that the variable nature of their loan, and all the interest rate fluctuations over the period, meant that it was actually impossible to predict the exact length of the repayment period.

The ombudsman found that the bank had been negligent by never drawing the customer's attention to the fact that "the anticipated term" of their loan could be longer because of the interest rate fluctuation. But he said the complainants "also had some duty in the matter" and should have inquired about whether the fluctuating interest rates would have any effect on their loan.

He ruled that the bank accept four further payments of £307.50 - about half the outstanding balance on the loan. As a result of this finding, lenders will undoubtedly be more careful about explaining the repayment time implications of variable rate personal loans.

For another bank customer, paying off a loan early proved to be a big mistake. He had borrowed £2,500 to buy a car and three years later decided to pay off the outstanding balance - £250 - early. However, three years later when he went looking for another loan, he was refused by four different banks on the grounds that he had defaulted on the original loan.

It seems the bank should have charged him £300, not £250, to clear his car loan and had marked him down as a defaulter. The bank admitted the error, but a claim for compensation was made to the ombudsman who ruled that even though his future credit rating would not be affected, the customer should still be paid £2,500 by the bank.

The ombudsman is pleased that the scheme is well known to the public - a survey last year showed that 76 per cent of all bank and building society branches have the ombudsman leaflets on display in their premises and that 61 per cent of respondents to the specially-commissioned survey said they were aware of the ombudsman's office. All inquiries receive a written response within 48 hours, while the average investigation and ruling takes 118 days.

The ombudsman can be contacted at 8 Adelaide Court, Adelaide Road, Dublin 2. Telephone: 478 3755.