70% surge in complaints about financial products recorded by ombudsman

Complaints about financial products jumped by around 70% between April and June, compared with the same period a year earlier, according to the Financial Ombudsman Service (FOS).

Consumers raised 74,645 cases with the resolution service about financial products between April 1 and June 30 this year, compared with 43,953 complaints reported in the same period last year.

Professional representatives, who tend to take a chunk of any payout, now account for around half of the complaints received by the ombudsman.

The service said that, in the first quarter of this financial year, 25% of claims brought by professional representatives were upheld, compared with 40% of those brought directly by consumers.

Most complaint issues brought by professional representatives relate to perceived irresponsible and unaffordable lending or motor finance, the service said.

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, more than 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 relate to motor finance commission. More than 90% of the motor finance commission complaints were brought by professional representatives.

Earlier this year the Financial Conduct Authority (FCA) announced it was carrying out a review of motor finance “discretionary commission arrangements”.

In the meantime, the ombudsman said it will continue to investigate the complaints that come to its service and are not captured by the FCA pause.

The ombudsman has been consulting on a proposed case fee for professional representatives and will give an update in the coming months.

FOS chief executive and chief ombudsman Abby Thomas said: “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.”

Published: 29/08/2024 by Radio NewsHub