Financial complaints soar by 70% in three months with credit cards top of the list

The Financial Ombudsman 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

Complaints about financial products have seen a 70% increase between April and June, compared to the same period last year, reveals the Financial Ombudsman Service (FOS).

The resolution service received 74,645 cases about financial products from April 1 to June 30 this year, a significant rise from the 43,953 complaints reported during the same period in the previous year. Professional representatives, who usually take a portion of any payout, now makeup around half of the complaints received by the ombudsman.

In the first quarter of this financial year, the service found that only 25% of claims brought by professional representatives were upheld, compared to 40% of those lodged directly by consumers. Most of the complaint issues raised by professional representatives are related to perceived irresponsible and unaffordable lending or motor finance, according to the service.

Credit cards topped the list as the most complained-about product in the first three months of this financial year, with a total of 18,175 complaints. A vast majority of these complaints – 15,580 – were about perceived irresponsible and unaffordable lending. More than half of this figure was brought forward by professional representatives.

Hire purchase (motor) came in second as the most complained-about product, with 15,925 complaints, of which around three-quarters relate to motor finance commission. Over 90% of the motor finance commission complaints were lodged by professional representatives.

The Financial Conduct Authority (FCA) made headlines earlier this year when it announced a review of the “discretionary commission arrangements” in motor finance. Amid the regulatory scrutiny, the ombudsman has vowed to keep investigating complaints that slip through the net during the FCA’s pause.

There’s also talk of change at the ombudsman, which has floated the idea of a case fee for professional representatives, with an update expected soon. Abby Thomas, the chief executive at FOS, said: “Whilst professional representatives have an important role to play, they must ensure that their cases are well evidenced and have merit.”

She added: “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.”