UK lenders must do more to support people in debt, ombudsman chief says

The head of the UK’s financial ombudsman has urged lenders to do more to help consumers struggling with debt after a surge in official complaints.

Abby Thomas, chief executive of the Financial Ombudsman Service (FOS), highlighted a 70 per cent year-on-year jump in financial complaints raised by consumers between April and June, totalling almost 75,000.

Credit cards were the most cited product, with 18,175 complaints – mainly related to “perceived irresponsible and unaffordable lending”.

Speaking at a conference hosted by debt counselling charity StepChange on Thursday, Thomas said it was “concerning to see such large volumes of complaints” and called on financial firms to take a more compassionate approach to debt management.

“There are so many well-established rules and guidelines – including most recently in the Consumer Duty -that are designed specifically to help financial businesses find ways of supporting their customers when the need arises,” she added.

“But despite this, we’re still seeing cases where customer experience has fallen far short of what it should have been.”

Citing examples of cases investigated by the FOS, Thomas said people do not always get a chance to engage with firms before debt collection begins and urged businesses to take a “tailored approach” to understanding why problems have arisen.

“People tell us their experiences of feeling harassed as part of the debt collection process and how their mental health has suffered as a result,” Thomas said.

Official UK banking complaints hit their highest level in a decade in the 2023/24 financial year, with current accounts the most complained about product amid concerns over administration and customer service.

The FOS upheld an average of 37 per cent of the complaints it resolved in 2023/24, up slightly from 35 per cent from the previous year.

Banking trade body UK Finance has said credit card firms must comply with strict regulations to assess whether lending is affordable and provide a range of support to people concerned about their finances.