Issues surrounding financial products skyrocket
Complaints about banks’ financial products have surged by 70% over the past year, according to new data from the Financial Ombudsman Service (FOS).
In the first quarter of the 2024/25 financial year, 74,645 complaints were lodged, a significant increase from the 43,953 complaints recorded during the same period last year.
Credit cards emerged as the most complained about financial product, with 18,175 cases reported, largely driven by issues related to irresponsible and unaffordable lending. Hire purchase agreements, particularly in the motor finance sector, followed closely with 15,925 complaints.
The FOS report, published on Thursday, also showed that professional representatives accounted for nearly half of all complaints in the first quarter, a sharp rise from just 17% in the same period the previous year. Despite this increase, complaints filed by professional representatives were less successful than those submitted directly by consumers. Only 25% of cases brought by representatives were upheld, compared to 40% of complaints made directly by consumers.
The data also highlighted that most complaints brought by professional representatives were related to irresponsible lending or motor finance issues, particularly around commission on hire purchase agreements. Over 90% of complaints regarding motor finance commission were filed by professional representatives.
Earlier this year, the Financial Conduct Authority (FCA) warned motor finance firms to prepare for additional costs from its review of car finance products. The regulator also plans to investigate the sale of pure protection insurance products, citing concerns over commissions and product value.
“It’s concerning that we’re continuing to see large volumes of complaints, particularly considering the cost-of-living crisis,” said Abby Thomas (pictured), chief executive and chief ombudsman of the Financial Ombudsman Service. “It’s vital that businesses are open and transparent with their customers, treating them with fairness and understanding.
“While 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.”
The FOS is currently consulting on a proposed case fee for professional representatives, aiming to better align the fee structure with the service’s costs. An update on these proposals is expected in the coming months.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
