Complaints about banks increase by 76%

Complaints to the Financial Ombudsman Service (FOS) regarding banks and credit card companies surged by 76% year-on-year in H2 2024, accounting for 109,155 out of an overall total of 141,846 complaints. This increase is attributed to a rise in financial scams and fraud. Vanquis Bank topped the list with 17,612 new complaints, followed by credit card provider NewDay with 8,345.

Barclays received 4,301 complaints in the second half of 2024, while Revolut received 3,397 and Monzo was the subject of 3,393. HSBC, which includes First Direct, and Santander received 3,276 and 2,829 complaints respectively. Lloyds, meanwhile, received 2,843 banking and credit complaints. The analysis shows that there was a 49% overall increase in complaints across all sectors compared to the previous year.

The newly released figures reveal continued high volumes of complaints with a total of 141,846 complaints received between July and December last year, compared to 95,349 complaints in the same period in 2023 (49% increase). 

The raised levels of complaints were driven by banking fraud, credit affordability disputes and motor finance commission cases.  

FOS is working closely with HM Treasury and the Financial Conduct Authority (FCA) to modernise the dispute resolution system so that it can continue to deliver for consumers, small businesses and financial services, as a quick and informal resolution service as an alternative to the courts. 

Around 46% of complaints within this period (July – December 2024) were referred to us by professional representatives. That’s compared to 22% during the same period in 2023. This growth has mainly been focussed on credit affordability and car finance complaints.  

Last month, FOS introduced a new fee model to charge professional representatives who bring more than ten complaints a year. The move aims to provide a fairer fee arrangement and encourage these representatives to submit better-evidenced complaints, considering their merits more diligently before referring them. 

FOS recently outlined plans to transform and improve its service to tackle the exceptional demand experienced across 2024/25. This includes increasing staffing capacity to resolve complaints and building flexibility into its workforce so that it can respond to changes in demand. 

There were 109,155 complaints from July to December 2024 in the banking and credit sector, compared to 62,139 during the same period in 2023.  

In the last six months of 2024, FOS upheld 33% of complaints in the consumers’ favour, compared to 36% in the second half of 2023. However, only around 25% of complaints brought by professional representatives were found in favour of the consumer, compared to around 37% brought directly by consumers for free. The data shows that uphold rates vary per firm. 

James Dipple-Johnstone, interim chief ombudsman at the FOS, said “Behind each case are customers waiting for an answer and we are committed to delivering fair, timely and effective resolutions for consumers and businesses alike. 

“The high demand reflected in today’s data underscores not only the vital role our service plays, but also the pressing need for reform to ensure it remains fit for the future. That’s why we’re committed to strengthening the dispute resolution system – so it works better for everyone and reflects the needs of today’s financial landscape.” 

Erin Sims, Financial Services Senior Analyst at RSM UK said “The total number of new complaints to the FOS jumped 53% from 165,957 in 2023 to 254,218 in 2024. This was driven by the banking and credit sector, with complaints up 83% from 110,235 in 2023 to 201,776 in 2024. This surge was largely due to a growing number of disputes related to authorised push payment (APP) fraud. The introduction of the Compulsory Reimbursement Scheme, which mandates banks to reimburse victims of APP fraud under certain conditions, has likely encouraged more consumers to challenge decisions and escalate unresolved cases to the FOS. While the scheme aims to protect consumers, it has also created a new layer of complexity in determining liability, leading to more disputes. Collaborative efforts between financial institutions, telecoms and tech platforms to disrupt fraud networks at the source will be essential to reduce fraud at scale and restore consumer confidence in digital payments.

“Investment-related complaints have also seen an uptick, likely reflecting the turbulent economic environment and volatile financial markets in late 2024. With inflationary pressures, geopolitical tensions and market uncertainty, we anticipate increased scrutiny of financial advice and transparency of risk disclosures will continue.

“Motor finance complaints, particularly those related to undisclosed or unfair commission arrangements, continue to be a major issue. Following heightened regulatory focus and media attention, consumers have become more aware of potential misselling in this area. The FOS has seen a surge in complaints where consumers allege they were not informed about commission structures that may have influenced the cost of their finance agreements. As we await the Supreme Court’s ruling on motor lender’s discretionary commission payments, we may see complaints continue to rise in the first half of this year.”