The number of complaints to the Financial Ombudsman Service (FOS) about fraud and scams has surged to record highs, figures show. The 40% rise in grievances after people have been tricked out of their money has pushed the overall number of complaints to its highest level in five years. For the first time in ten years, PPI complaints made up less than half (46%) of new complaints received while complaints about fraud and scams increased by 43%. Authorised push payment (APP) fraud, where someone is tricked into transferring money directly to a fraudster, is one of the fastest-growing types of fraud.

The FOS annual report also highlighted a 12,000 rise in complaints about fraud and scams with authorised push payments one of the fastest-growing problems. Complaints about IT failures rose by 8% to 150,000.

Overall, complaints about financial services shot up to a five-year high, with more than 388,000 new complaints made in the last financial year, a 14% increase on the previous year.

Caroline Wayman, Chief Executive of the Financial Ombudsman Service, said “Too often we see that the interests of consumers are not hard-wired into financial services. This marks a five-year high in the number of complaints that consumers have brought to us, and the behaviour we’ve seen from some businesses is simply not good enough.”

Responding to the FOS figures, a UK Finance spokesperson said “The finance industry is committed to providing quality customer service, and if things do go wrong, putting them right as soon as possible. Increased complaint levels are always disappointing, but the industry can now use this data to make improvements to the services it provides and address complaints effectively.”

Gareth Shaw, Head of Money, Which?, said “Bank transfer fraud is spiralling out of control, with people losing life-changing sums every day and then facing a gruelling battle to get their money back from the very banks that should be preventing them from falling victim in the first place.

“Banks have just two weeks to sign up to the new industry code, which will only be deemed a success if they finally halt this worsening crime by offering better protection to their customers, while swiftly and fairly reimbursing all those who lose money through no fault of their own.”

Peter Janes, co-founder and CEO of payment provider Shieldpay, said: “Banks have buried their heads in the sand for too long when it comes to supporting victims of fraud. It’s only now, as we hit record numbers of complaints, that change is slowly starting to trickle through the banking industry. And, while committing to better levels of compensation is a welcome step, it’s simply firefighting, rather than tackling the source of the problem. Banks must take advantage of the increasingly sophisticated technology that is available to stay ahead of the fraudsters, stop customers becoming victims and reverse a worrying trend that could easily spiral further out of control.”

“It’s vital that increased safety checks are put in place to protect people when they making payments online. Adopting new solutions – like Shieldpay – that verify the identity of both sides in a transaction and hold the money securely until both sides agree they’re happy, can eliminate fraud risk.”