UK banking complaints nearly double amid credit card and motor finance woes

Official UK banking complaints almost doubled in the first half of 2024 as consumers hit out against firms’ handling of credit cards and motor finance.

The six months saw 101,031 new banking and credit card complaints lodged with the Financial Ombudsman Service (FOS), which resolves disputes between consumers and financial firms.

That was up from 56,690 complaints in the first half of 2023. The bulk of new cases related to disputes about credit cards and perceived unaffordable lending, alongside car finance woes, fraud and scams.

Overall, the FOS’ data showed a 40 per cent rise in complaints across all products to 133,019 during the first half of this year.

Banking and credit, which continued its streak as the most complained about sector, was the only category that saw a year-on-year increase in cases.

In the six months, the FOS upheld 35 per cent of complaints in the consumers’ favour, compared to 37 per cent during the first half of 2023.

“Businesses should put consumers at the heart of their service but the high level of complaints we receive shows that’s not always the case,” said Abby Thomas, the FOS’ chief executive.

“It’s vital that businesses are open and transparent with their customers, treating them with fairness and understanding.”

The FOS has seen an avalanche in complaints tied to car finance this year after the Financial Conduct Authority (FCA) announced in January that it would review whether customers were unfairly charged high interest rates through now-banned commission arrangements.

Some analysts have estimated that the motor finance industry could be on the hook for up to £16bn in compensation fees as a result of the probe. The FCA is due to set out its next steps in May 2025.

The FOS said more than half of all banking and credit complaints over the period were brought by professional representatives. A year earlier, just a quarter of the cases were brought by these groups, which include claims management firms.

Professional representatives have come under fire in recent years as the FOS has found that some submit mass claims without determining whether they have merit, while others fail to respond to requests for evidence.

In May, the FOS proposed a £250 fee for professional representatives to lodge a case, reduced to £75 if the outcome favours the consumer. Banking trade body UK Finance has backed the proposal.

“Whilst professional representatives have an important role to play, they must ensure that their cases are well evidenced and have merit,” Thomas said on Thursday.

“If people don’t feel they’ve been treated fairly by their financial provider, they can come directly to our service and we’ll see if we can help. Getting a fair answer is free and easy.”

A UK Finance spokesperson commented: “Credit card companies and lenders must comply with strict regulatory rules to assess whether lending is affordable and they also provide a wide range of support to anyone concerned about their finances or repayments.”