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Credit card complaints to the Ombudsman hit record levels

Credit card complaints to the Ombudsman hit record levels
Matt Browning
Written By:
Matt Browning

The Financial Ombudsman Service (FOS) received the most ever credit card complaints over a three-month period at the end of last year, data reveal.

From October to December, 5,600 customers made complaints about their credit cards, a jump from 3,216 at the same point the previous year.

The majority of the complaints were about unaffordable or irresponsible lending from financial firms, this also marked a huge rise from 2022/23, where just 665 complaints of that nature were made.

Overall, the service received more complaints in Q3 of this financial year than it did the year before, investigating 47,868 complaints compared to 41,303 in 2022/23.

The FOS upheld (resolved in favour of the complainant) a third (35%) of all the complaints it resolved, similar to the same period in 2022/23.

Uphold rates of professional representatives lower than customers going direct

Meanwhile, the success of the complaints upheld differed when a professional representative like a claims management company was involved.

More professional representatives made credit card complaints about unaffordable lending than last year too – with three-quarters of them accounting for the total number, compared to just 25% in the same period the year before.

But, just 14% of those professionally represented complaints were upheld, whereas customers who made the complaint directly had a 44% success rate.

The main issue from complainants about their credit cards was that people felt the provider didn’t intervene over their high credit balances or big credit limits. Another frequent complaint was that providers should have provided a lower interest rate than they did.

Unaffordable lending dominates rising complaint numbers

Almost three-quarters (70%) of the credit card and unaffordable lending complaints highlighted in the new figures were brought by professional representatives, compared with just a quarter of these complaints in the third quarter of 2022/23.

Elsewhere, customers raised the most complaints about their current accounts (7,804), followed by hire purchase complaints on their vehicle (5,419) and car or motorcycle insurance (4,123).

The rise in insurance complaints is due to some insurance companies delaying claim payouts, an inability to source materials, and a lack of contractor availability to make repairs.

Earlier this year, the free financial dispute resolution service predicted it would receive more than 180,000 complaints this year. It also forecasted unaffordable lending to be a particular issue too, which is reflected in the third quarter’s data.

Credit card complaint rises ‘concerning to see’

Abby Thomas, chief executive of the FOS, said: “Given that many people are struggling in the current economic environment, it’s concerning to see such a significant rise in credit card complaints.

“Owing significant amounts of debt can be stressful and it’s important that consumers are treated fairly and transparently by financial service providers.

“Lenders have a duty to support their customers whatever their circumstances and are obliged to help people who are struggling with debt.”

“You do not need to use professional representatives to bring a complaint’

The ombudsman director for consumer credit at the FOS, Viv Kelly, warned customers against professional representatives who bring “poorly evidenced complaints”.

Kelly said: “In these instances, uphold rates can be considerably lower than if a consumer brings a complaint directly to our service.

“Consumers don’t need to use a professional representative to bring a complaint to our service. People can come directly to our free, independent service and we’ll see if we can help resolve their complaint.”