Credit, Collections & Insolvency News
Complaints about banks have reached a ten-year high according to the Financial Ombudsman Service (FOS)
FOs received over 80,137 complaints in the year to 5th April, a 29% increase from the previous year with concerns about current accounts, credit cards, and scams being the main issues.
The service forced banks to uphold 37% of cases in favour of customers. Poor customer service and administrative problems were identified as key problems for savers.
The single most complained about financial product in 2023/24 was current accounts, with 30,635 cases. FOS received 24,402 complaints about credit cards, a 265% increase from the previous year. Banks have also faced criticism for failing to protect customers from fraudsters, with complaints rising by a fifth. H
igher complaint levels are being seen across the entire financial services sector, with total ombudsman cases jumping 20% to 198,798 in 2023/24.
Abby Thomas, Chief Executive of the FOS, said “It’s always concerning when you see cases rise so significantly, particularly when so many people are struggling in the current economic climate.
“Whether someone is the victim of a fraud, struggling with credit card debt, or having issues with their overdraft, they deserve support and understanding from their financial provider. It is imperative that all businesses treat their customers fairly and in a timely manner. If consumers don’t feel they’ve been treated fairly, they should contact our free, independent service and we’ll investigate their complaint.”
James Dipple-Johnstone, Deputy Chief Ombudsman of the Financial Ombudsman Service, said “A quarter of all cases coming to the Ombudsman were brought by professional representatives in the last financial year. While they have an important role to play in resolving financial disputes, they can also gain financially from our service without contributing to the running costs. There is sometimes little evidence of due diligence by some representatives to ensure claims they advance have merit.
“We are committed to making our service is as accessible as possible, while ensuring it remains free for all customers and that those with upheld complaints can keep all of any reward we make. Our proposed charges aim to ensure we cover the costs associated with resolving disputes while reflecting a fairer allocation of those costs.”
A UK Finance spokesperson said “Credit card companies and lenders must comply with strict regulatory rules to assess whether lending is affordable, and they also provide a wide range of support to anyone concerned about their finances or repayments.”
Neil Kadagathur, CEO and Co-Founder, Creditspring, said “With reliance on credit soaring, it’s critically important that financial firms are making safe, responsible lending decisions. Unfortunately, FOS data indicates that this isn’t always the case, and many consumers may be at increased risk of debt spirals as a result of irresponsible lending by banks.”
“This must change – our research shows that three in ten (29%) people think their bank could be doing more to support them to make better financial decisions, and this soars to 43% among young people. Across the industry, lenders must listen to this and step up to take greater responsibility for the financial wellbeing of their customers, leading them not towards unaffordable borrowing, but safe and transparent credit products that will help to build their financial stability over the long-term.”
Breakdown of the most complained about products
| Product | 2023/24 | 2022/23 |
|---|---|---|
| Current accounts | 30,635 | 26,039 |
| Credit cards | 24,402 | 14,504 |
| Hire purchase (motor) | 21,441 | 11,446 |
| Car/motorcycle insurance | 16,322 | 11,851 |
| Conditional sale (motor) | 7,829 | 1,900 |