Banking complaints hit 10-year high – here’s what’s behind the huge surge

Complaints about banking services have reached a ten-year high, with a rising wave of scams fuelling the surge.

The Financial Ombudsman Service (FOS) said such complaints were “at their highest level in at least a decade” in the 2023/24 financial year.

The FOS also said it was investigating more allegations of fraud and scams than ever before.

Consumers raised 80,137 cases with the free resolution service on banking and payment products in the last year, an increase of 29 percent compared to the 61,995 in 2022/23.

Consumers filed 24,402 credit card complaints in 2023/24, of which 13,584 were due to unpayable or irresponsible lending.

In comparison, in 2022/23, there were 14,504 credit complaints and only 3,723 were about this complaint topic.

Meanwhile, fraud and scam cases have risen by a fifth and are now at their highest level with 27,312 complaints in the 2023/24 financial year.

About half of these cases were authorized automatic payment scams in which someone is tricked into sending money online to a scammer posing as a genuine beneficiary.

In addition to current accounts and credit cards, the other three categories among the top five most reported products were hire purchase (automobiles), car or motorcycle insurance and conditional sale (automobiles), all of which saw year-on-year increases.

The FOS upheld 37 per cent of the complaints it resolved last year across all areas, which is slightly higher than the 35 per cent recorded in 2022/23.

The increase was driven by people’s concerns about their current accounts and credit cards, as well as fears of being victims of fraud and scams.

In particular, consumers complained about management and customer service, followed by the perception that financial companies provided unaffordable or irresponsible loans.

But complaints are not only increasing in the banking sector.

Overall, the Ombudsman is seeing an increased number of cases across all areas, with 198,798 new complaints in 2023/24 compared to 165,149 in the previous year.

Although the banking sector has seen the most complaints overall, the biggest increase has been in car finance: complaints about conditional sale agreements rose 312 per cent in a year.

FOS chief executive Abby Thomas said: “It’s always worrying when cases rise so significantly, particularly when so many people are struggling in the current economic climate.

‘Whether someone is a victim of fraud, struggling with credit card debt or overdraft, they deserve the support and understanding of their financial provider.’

Consumers warned about companies making dubious claims

Complaints are increasingly being submitted by claims management companies (CMCs) and professional representatives.

These accounted for 25 percent of cases in 2023/24, compared with 18 percent the previous year.

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The FOS warned it had seen “examples of good and bad practice” by professional representatives helping to make claims for money or a share of any compensation.

Some of these representatives They make massive claims without any basis, while others fail to respond to the FOS when it requests further evidence.

The FOS said: “Consumers can take their case directly to the Financial Ombudsman Service free of charge and keep 100 per cent of any compensation they are awarded.”

James Dipple-Johnstone, Deputy Ombudsman at FOS, said: ‘A quarter of all cases that came to the Ombudsman were brought by professional representatives during the last financial year.

‘While they play an important role in resolving financial disputes, they can also derive economic benefits from our service without contributing to operational costs.

‘There is sometimes little evidence of due diligence by some representatives to ensure that the claims they make have merit.’