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

Complaints about banking have hit a 10-year high, with a rising tide of scams fuelling the rise.

The Financial Ombudsman Service (FOS) said these 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 fraud and scam complaints than ever before.

Consumers raised 80,137 cases with the free resolution service about banking and payment products in the last year  – a rise of 29 per cent on 61,995 in 2022/23.

Flurry of fraud: The Ombudsman said more consumers are bringing  claims due to scams

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

By comparison, in 2022/23, there were 14,504 credit complaints and just 3,723 were about this complaint issue.

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. 

Around half of these cases were authorised push payment scams where someone is tricked into sending money online to a fraudster posing as a genuine payee.

Aside from current accounts and credit cards, 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.

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.       

Driving the increase were people’s concerns about their current accounts and credit cards, as well as worries that they may have fallen victim to frauds and scams.

In particular, consumers complained about administration and customer service followed by perceived unaffordable or irresponsible lending by financial firms.

But complaints are not just 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. 

Although banking has seen the most overall complaints, the biggest rise has been with car finance – with conditional sale agreement complaints rising 312 per cent in a year. 

FOS chief executive Abby Thomas 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.’

Consumers warned of dodgy claims firms 

Increasing levels of complaints are being brought by claims management companies (CMCs) and professional representatives.

These accounted for 25 per cent of cases in 2023/24 compared to 18 per cent in the previous year.

The FOS warned that it has seen ‘examples of both good and bad practice’ from professional representatives, who help make claims for money or a cut of any compensation.

Some of these representatives submit mass claims without any merit, while others fail to respond to the FOS when it asks for more evidence.

The FOS said: ‘Consumers can bring their case directly themselves to the Financial Ombudsman Service for free and keep 100 per cent of any compensation awarded to them.’

James Dipple-Johnstone, FOS deputy chief ombudsman, said: ‘A quarter of all cases coming to the Ombudsman were brought by professional representatives in the last financial year. 

‘While they have an important role to play in resolving financial disputes, they can also gain financially from our service without contributing to the running costs.

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