Banking complaints increase by 70%

Latest data from the Financial Ombudsman Service (FOS) has shown that  complaints from bank customers  over financial products soared 70% last quarter from a year earlier. The rise was mostly driven by disputes linked to credit cards and car loans,

FOS data shows that there were almost 74,645 complaints in the last quarter compared to 43,953 in the second quarter of 2023.

Credit cards were the most complained about product in the first three months of this financial year, receiving 18,175 complaints. The vast majority of these complaints – 15,580 – were about perceived irresponsible and unaffordable lending. Of this figure, over half were brought by professional representatives.

Hire purchase (motor) was the second most complained about product, with 15,925 complaints, of which around three quarters are in relation to motor finance commission. Over 90% of these motor finance commission complaints were brought by professional representatives.

Professional representatives now account for around half of the complaints received, compared to just 17% in the first three months of 2023/24.

FOS says that ising a professional representative does not necessarily lead to a more favourable outcome with the data demonstrating that, in quarter one of this financial year, only 25% of claims brought by professional representatives were upheld, compared to 40% of those brought directly by consumers directly.

In recent months, FOS havs been consulting on a proposed case fee for professional representatives, aiming to make the fee model fairer and better reflect costs.

Commenting on the figures, Abby Thomas, Chief Executive and Chief Ombudsman of the Financial Ombudsman Service, said “It’s concerning that we’re continuing to see large volumes of complaints, particularly considering the cost-of-living crisis. It’s vital that businesses are open and transparent with their customers, treating them with fairness and understanding.

“Whilst professional representatives have an important role to play, they must ensure that their cases are well evidenced and have merit.”