Ombudsman Reports Record High Level of Complaints in Banking Sector in the Last 10 Years
Over the past financial year, more than 80,000 complaints were raised with the Financial Ombudsman Service, with a significant rise in online fraud scams.
The Financial Ombudsman Service (FOS) reported that banking sector complaints have reached a decade-high level.
Customers submitted 80,137 cases to the free resolution service regarding banking and payment products in the financial year 2023/2024, compared to 61,995 in 2022/2023.
The increase in complaints was mainly due to concerns related to current accounts, credit cards, and fraud issues.
Current accounts received the most complaints with 30,635 cases, followed by credit cards with 24,402 complaints, of which 13,584 were related to perceptions of unaffordable or irresponsible lending.
In the previous financial year, there were 14,504 credit-related complaints, with 3,723 related to irresponsible lending.
In 2023/2024, fraud cases generated 27,312 complaints, half of which were linked to authorised push payment (APP) scams.
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A spokesperson from UK Finance stated: “The financial services sector takes complaints seriously.
“Firms are committed to resolving issues and providing positive outcomes for customers in cases where mistakes occur.
“Credit card companies and lenders have to adhere to strict regulatory guidelines to evaluate affordability and also offer support to individuals concerned about their financial situation or repayments.
“Additionally, the financial services industry prevents over £1 billion in fraud each year and is the sole sector that compensates victims.
The FOS reported an increase in cases across various categories, with 198,798 new complaints in 2023/24 compared to 165,149 in the previous year.
The upward trend appears to be continuing into the current financial year.
The chief ombudsman at the FOS, Abby Thomas, emphasized the importance of providing support and understanding to customers facing fraud, credit card debt, or overdraft issues.
Thomas added that it is crucial for all businesses to treat their customers fairly and in a timely manner.
Customers who feel they have been treated unfairly are encouraged to contact the free, independent service for investigation.
Claims Management Companies
The FOS also noted an increase in complaints brought by claims management companies (CMCs) and professional representatives, accounting for 25 percent of cases in 2023/2024 compared to 18 percent the previous year.
The service highlighted concerns about some mass claims and delays in investigations due to firms failing to respond to evidence requests.
Professional representatives may receive a portion of the compensation awarded to clients in upheld complaints, but consumers have the option to bring their case directly to the FOS and retain all compensation.
The FOS has proposed a case fee for professional representatives to make the fee structure more equitable.
Under the proposed charges, professional representatives would be charged up to £250 to initiate a case, with a reduced fee of £75 if the outcome favors the consumer.
James Dipple-Johnstone, deputy chief ombudsman at the FOS, expressed concerns about the lack of due diligence by some representatives in advancing meritless claims.
The FOS upholds 37 percent of the complaints it resolves across all financial products, slightly higher than the 35 percent recorded in 2022/2023.
This emphasizes the importance of upcoming regulations that will mandate most scam victims to be reimbursed and treated fairly and consistently.”
PA Media contributed to this story.
