I'm having a problem with my shower. The water is not all coming out of the shower head, but out of the faucet. The type of shower I have switches to the shower by pulling down on the faucet head. I uploaded a short video of the problem; notice how water, when I pull down on the faucet head, comes out of the faucet head and from the seam on the wall. I do have water coming out of the shower head.

What would cause this problem? Am I looking at a problem with the faucet itself, or a plumbing issue, or something else? Do I have to worry about water in the house?

http://www.youtube.com/watch?v=O4tOBZk9Au8&feature=youtu.be

Thanks.