Financial Ombudsman Service statistics
The Financial Ombudsman Service (FOS) published figures today (11 July 2024) revealing that complaints about the banking sector are the highest in more than a decade.
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FOS observations include:
- Concerns about current accounts, credit cards and fraud and scam have driven a significant increase in banking and payment complaints
- Within the banking sector, the Financial Ombudsman Service is investigating more fraud and scam complaints than ever before.
- Across the board, the most complained about products have seen cases rise year-on-year”
In the last financial year (2023/24), consumers raised 80,137 cases with the FOS about banking and payment products, 23% more than the previous year.
Financial complaints received in the second half of 2023 rose by a fifth, showing a general trend for an increasing number of complaints. The FOS says that this growth will continue into the new financial year.
Issues behind the increase
The increase was mostly due to consumers complaining about administration and customer service. See the case with which I helped Blocked by Barclays and the horrors of customer service for a shocking example.
- Consumers’ worries about current accounts, consumers lodged 30,635 complaints, compared to 26,039 the previous year.
- Credit cards made up 24,402 complaints in 2023/24, of which 13,584 were due to unaffordable/irresponsible lending. This is a significant rise from 2022/23, which saw 14,504 credit complaints and only 3,723 about lending affordability.
- Fears around being victims of fraud or scams, which rose by a fifth and are now at their highest level with 27,312 complaints in the 2023/24 financial year. Around half of these cases were “authorised push payment” (APP) scams where someone is tricked into sending money online to a fraudster posing as a genuine payee.
Complaints are not only rising in the banking sector. Overall, the Ombudsman is seeing higher case levels across the board with 198,798 new complaints in 2023/24 compared with 165,149 the previous year, a 17% rise.
The other three categories in the top five most complained about products were hire purchase (motor), car/motorcycle insurance and conditional sale (motor), all of which saw year-on-year increases.
“Upheld complaints” rate
On average, across all financial products, the Financial Ombudsman Service upheld 37% of the complaints it resolved, which is slightly higher than the 35% recorded in 2022/23.
FOS comments
Abby Thomas, Chief Executive and Chief Ombudsman of the Financial Ombudsman Service, said:
It’s always concerning when you see cases rise so significantly, particularly when so many people are struggling in the current economic climate.
“Whether someone is the victim of a fraud, struggling with credit card debt, or having issues with their overdraft, they deserve support and understanding from their financial provider.
“It is imperative that all businesses treat their customers fairly and in a timely manner.
“If consumers don’t feel they’ve been treated fairly, they should contact our free, independent service and we’ll investigate their complaint.”
Claims Management Firms
25% of cases brought to FOS in 2023/24 were by Claims Management Companies and professional representatives, compared with 18% in the previous year.
There has been both good and bad practice by these businesses. Some submit mass claims without determining whether they have merit, whilst others fail to respond to requests for evidence slowing down FOS investigations. James Dipple-Johnstone, FOS Deputy Chief Ombudsman, said “There is sometimes little evidence of due diligence by some representatives to ensure claims they advance have merit.”
Despite consumers being able to take cases to FOS themselves and keep 100% of any compensation, these professional companies usually charge 25%.
The FOS has been consulting on a fee structure which is fairer for consumers. It proposes that the FOS would charge a business £250 to bring a case, reduced to £75 if the outcome is determined in favour of the consumer.
Certainly I believe that something needs to be done to stop CMCs cashing in consumer cases in this way. The FOS are there to help consumers submit cases.
Dipple-Johnstone said:
We are committed to making our service is as accessible as possible, while ensuring it remains free for all customers and that those with upheld complaints can keep all of any reward we make.
“Our proposed charges aim to ensure we cover the costs associated with resolving disputes while reflecting a fairer allocation of those costs.”
Refunds for Fraud
Currently banks are not legally obliged to refund victims of fraud. However, some banks are signed up to a voluntary Code of Practice and will do.
Criteria for a refund
You will need to show that you were not “grossly negligent”. In particular you should always pay attention to any warning your bank gives you and let the bank know as soon as possible if you suspect fraud, do this even before you are sure as they may be able to stop the payment. You will need to share all the necessary information the banks needs and consent to the case being referred to the police.
Redress for fraud victims
Currently banks do not have to refund victims of fraud but 7 banks will do in some cases as they are signed up to the Voluntary Code of Practice.
The Lending Standards Board oversees the Code. See its resources page.
Banks can assess a claim against the principles of the code and decide whether to make a full, partial, or no refund at all.
But from 7 October 2024, there will be new rules in Faster Payments – the payment system across which the vast majority of APP fraud currently takes place – strengthening Pay.UK’s ability to tackle fraud.
In the new requirements, payment firms will only be able to make a maximum deduction of £100 from the full reimbursement. They are not required to deduct this amount, but if they choose to make a deduction it will be capped at £100.
The requirements place financial incentives on all payment firms to tackle fraud. Firms must prioritise the delivery of the systems and the implementation of effective processes. Part of this will see firms reassessing their fraud risk management to make sure it is fit for purpose or updating these risk appetites through reassessing their transaction limits.
This also means being able to identify suspicious payments before they are made, including, if need be, intervening in the payment journey to alert customers before they try and make a payment. It also means having effective fraud prevention measures in place to prevent scammers from taking control of receiving accounts.
All payment firms will be incentivised to take action, with both sending and receiving firms splitting the costs of reimbursement 50:50.
Customers will be more protected under consistent minimum standards, with most APP fraud victims being reimbursed within five business days and additional protections offered for vulnerable customers who will not be charged any fee. And where the gross negligence principle will not apply.
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Further help with complaining for consumers
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Top 20 Tips How to complain effectively.
If you need more help, information and tips with how to quote Acts, template letters and advice on how to complain effectively don’t forget the GET THE BOOK! How To Complain: The ESSENTIAL Consumer Guide to Getting REFUNDS, Redress and RESULTS!
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