Complaints about financial products have increased by 70% in the past 12 months when compared to the equivalent figure from last year, the Financial Ombudsman Service (FOS) has revealed today.
According to the FOS, in the first quarter of this financial year (1 April – 30 June 2024), consumers raised 74,645 cases with the free resolution service about financial products compared to the 43,953 complaints reported in the same period in 2023/24.
Professional representatives now account for around half of the complaints received by the Financial Ombudsman, compared to just 17% in the first three months of 2023/24.
Using a professional representative does not necessarily lead to a more favourable outcome. Today’s data demonstrates 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 to the Ombudsman for free.
In recent months, the Financial Ombudsman has been consulting on a proposed case fee for professional representatives, aiming to make the fee model fairer and better reflect the Ombudsman’s costs. FOS says that an update on these proposals will be provided in the coming months.
Commenting on today’s 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.
“If consumers have a dispute with their bank or finance provider they can come directly to our easy-to-use service for free and we will see if we can help”.
Most complaint issues brought by professional representatives relate to either irresponsible and unaffordable lending or motor finance.
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.