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Ombudsman expects increase in mortgage complaints

Ombudsman expects increase in mortgage complaints
Shekina Tuahene
Written By:
Shekina Tuahene
Posted:
04/04/2024
Updated:
04/04/2024

The Financial Ombudsman Service (FOS) has said it expects a “slight increase in complaints about mortgages” led by higher interest rates as fixed terms end.

It has forecast 149,200 new complaints within the banking and consumer credit sector for 2024/25, including a rise in complaints around “irresponsible and unaffordable lending”, as the cost of living increases, and account closure complaints. 

The FOS also predicted an increase in disputed transaction cases due to the “increasing volume and sophistication” of fraud and scams, as well as issues related to motor finance commission non-discretionary cases. 

This was revised upwards from its consultation expectation for 122,600 complaints. 

In total, the FOS predicted there would be 210,000 complaints over the period. 

Resolving complaints faster 

The FOS said it was expecting higher demand for its services this year as it committed to “resolving complaints faster” and would set itself more targets. 

It reduced the time to resolve a case from 4.8 months in 2022/23 to 2.96 months in the last three months of 2023/24. It will aim to resolve 90% of cases within six months. 

The FOS said it was informed by stakeholders that there could be more complaints related to Consumer Duty, which it suggested was contributing to the rise in banking, consumer credit and insurance cases it had been seeing. It said it would continue to monitor this. 

Lower costs for businesses

Its Compulsory Jurisdiction (CJ) levy will fall from £109.8m in 2023/24 to £70m this year, while its Voluntary Jurisdiction (VJ) levy will reduce from £900,000 to £500,000. 

The individual case fee will also be lowered from £750 to £650. 

In real terms, when accounting for inflation and the rise in cases, this will mean a £60m reduction in case fees and levy costs to firms, the FOS said. 

Abby Thomas, chief executive and chief ombudsman of the FOS, said: “The Financial Ombudsman Service continues to make significant improvements in the service we offer, getting customers decisions more quickly while maintaining the high quality of our work. We will be even more ambitious next year, with plans to resolve complaints faster, while also reducing the cost of our service to businesses.

“In the year ahead, it’s likely that our service will see increasing levels of complaints, with many of those disputes expected to focus on the critical issues that impact people’s everyday lives. This includes perceived unaffordable lending, concerns about car loan agreements, and disputes around fraud and scams.” 

Thomas added: “With uncertainty around casework levels in the year ahead, we’re building a service that is flexible and agile, allowing us to respond to increased demand across any area of our business. 

“Our plans will help ensure that the customer is at the heart of everything we do. We want every person who engages with our service to clearly understand the outcome of their case. Now more than ever it’s crucial that businesses work with us to improve all customers’ experiences of financial services.” 

In November, the FOS reported that there were more later life complaints about delays due to rising interest rates.

Related: Complaints about financial advisers set for ‘record-high levels’