Banking sector complaints have reached their highest level in a decade, the Financial Ombudsman Service (FOS) announced on Friday.
Customers raised 80,137 cases with the free resolution service about banking and payment products in the financial year 2023/2024, compared with 61,995 in 2022/2023.
Current account concerns, credit card issues and worries about fraud were behind the increase, according to the FOS.
Current accounts were the product that received the most complaints, with 30,635 raised, and credit cards followed with 24,402, of which 13,584 were due to perceptions of unaffordable or irresponsible lending.
In 2022/2023, there were 14,504 credit complaints and 3,723 related to irresponsible lending.
The year 2023/2024 also saw fraud cases generate 27,312 complaints, with around 50 percent concerning authorised push payment (APP) scams, where a victim is tricked into transferring money online to a fraudster presenting themselves as a genuine payee.
A UK Finance spokesperson said: “The financial services sector takes complaints seriously.
“Where things go wrong firms will always look to put it right and provide good outcomes for customers.
“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.
“Meanwhile, the financial services industry prevents over £1 billion of fraud taking place every year, and is currently the only sector which reimburses victims.”
The ombudsman said it is seeing more cases across the board, with 198,798 new complaints in 2023/24 compared with 165,149 the previous year.
It added that the trend seems to be continuing into the current financial year.
Abby Thomas, chief ombudsman at the FOS, said: “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.
Claims Management Companies
The FOS also said more and more complaints are being brought by claims management companies (CMCs) and professional representatives, accounting for 25 percent of cases in 2023/2024 compared with 18 percent the previous year.The service has seen examples of good and bad practice by professional representatives, it said, highlighting concerns about some mass claims, and firms failing to respond to requests for evidence, thereby delaying investigations.
When complaints are upheld, professional representatives can take a chunk of the redress awarded to their clients, but consumers can take their case directly to the FOS and keep all the compensation.
In recent months, the service has been consulting on a proposed case fee for professional representatives, aiming to make the fee model “fairer”.
Professional representatives would be charged up to £250 to bring a case, reduced to £75 if the outcome is determined in favour of the consumer.
James Dipple-Johnstone, deputy chief ombudsman at the FOS, said of CMCs: “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 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.”
Across all financial products, the FOS upheld 37 percent of the complaints it resolved, which is slightly higher than the 35 percent recorded in 2022/2023.
