- HP was the third product with the most complaints received at FOS 2023/4
- Almost 21,500 complaints were registered
- Car/motorcycle insurance was the most reported type of insurance
Car instalment finance has become one of the three most complained about products in the Financial Ombudsman Service’s annual complaints list.
Complaints about HP almost doubled between 2023/4 and the previous year, with almost 21,500 dissatisfied customers contacting the FOS.
Most of the cases were cases of car finance commissions.
Driven by the surge: FOS registered 21,441 complaints for hire purchase between 2023 and 2024, up from 11,446 in the previous year.
In total, the FOS received 198,798 new complaints in 2023/24, compared to 165,149 the previous year.
Much of this increase has been driven by complaints about motorsports, including HP.
Between 2023 and 2024, the FOS registered 21,441 claims for installment purchases, while in the same period of the previous year only 11,446 claims were registered.
This puts it in third place on the overall list of complaints, with only complaints about checking accounts and credit card companies receiving more complaints.
HP Finance offers car buyers a flexible way to purchase a new or used car, spreading the cost over monthly installments.
Once you have paid off your contract, you will own the car outright.
Of the total number of complaints from the Motor Finance Commission sent to the FOS, 90 per cent were made by professional representatives.
Another motor-related product was one of the most complained about: conditional sale ranked fifth on the FOS list of complaints, with 7,829 cases compared to just 1,900 the previous year.
This represents a 312 percent increase in complaints about conditional sales.
Conditional sale is a loan very similar to HP, but the products are different.
With CS the customer must become the legal owner of the vehicle, whereas with HP the customer can choose to take title as legal owner at the end of the contract.
Conditional sales also use “balloon” payments, as with PCP. The car does not belong to the owner until the last instalment is paid.
The FOS found that 4,000 of the complaint cases were filed because of loans perceived to be irresponsible or unaffordable.
In January 2024, the Financial Conduct Authority (FCA) announced that it was conducting a review of “discretionary commission arrangements” (DCAs).
As part of this review, they have suspended the eight-week deadline for car finance companies to provide a final response to consumer complaints.
Overall insurance claims up 18 percent compared to 2022/23, with 47,010 cases
Complaints about car insurance are on the rise
Car insurance also recorded a high number of complaints and was the most complained about insurance category of all.
Overall, insurance claims increased by 18 percent compared to 2022/23, with 47,010 cases.
Of these, 16,322 were claims related to cars and motorcycles, which represents an increase of 38 percent compared to last year’s data.
The maintenance rate also increased for this product, from 30 percent in 2022/23 to 38 percent in 2023/24.
In the insurance sector, the FOS reported more complaints about claim delays and rejected claims, as well as an increase in insurers delaying claim payments.
The FOS has also seen an increase in the number of consumers contacting them because they are unhappy with the value or amount of the settlement received following an insurance claim.
This follows a painful year for drivers who saw insurance rates skyrocket.
Long-suffering drivers faced another rise in car insurance premiums this year, with the average driver now paying a record £635 for cover.
This is another all-time high and up from £627 in the last three months of 2023, the Association of British Insurers (ABI) said.