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Banking problems drive sharp rise in complaints

John Fitzsimons
Written By:
John Fitzsimons

The number of complaints taken to the Financial Ombudsman Service (FOS) has jumped significantly over the past 12 months, driven by issues with banking and credit products.

While the overall number of complaints to the FOS only rose by 2%, when you exclude issues related to payment protection insurance (PPI) there is a whopping 58% rise in complaints, with 235,993 new non-PPI complaints up from 149,315 in 2019/20.

The FOS is a free arbitration service, established to help in the event that a financial firm doesn’t deal with your complaint to your satisfaction. You need to complain to the firm that you believe has wronged you directly first, but if they don’t rectify the situation within eight weeks, you can then take the complaint to the FOS.

Upset about banking

The FOS said that this spike in complaints was largely the result of greater numbers of complaints about banking and credit products, with the number of issues taken to the Ombudsman jumping by 66% over the year.

Current accounts were the most complained about product, while unaffordable lending was found to be the most complained about issue.

It’s not just banking that is upsetting us though. The annual report from the FOS revealed that the number of complaints about investments and pensions almost doubled, from 10,920 in 2019.20 to 20,854, while the number of issues with insurance rose by more than a third to a total of 44,487 complaints.

While the number of non-PPI issues has risen, the number of complaints being upheld has actually dropped, from 44% last year to 40% this time around.

Nausicaa Delfas, interim chief executive and chief ombudsman of the FOS, noted that the body had seen demand for its services “increase significantly” over the last year.

She added: “The sharp increase in complaints about issues other than PPI is a reminder that it has rarely been more important for financial businesses to support their customers when things go wrong. As people continue to deal with the impact of Covid-19 on their lives and finances, they know they can come to our service if they’re not happy with how a financial business has treated them.”

The FOS data follows figures from complaints service Resolver which found that problems with online shopping has dominated its own workload over the last year.

Banks passing the buck on scams

Gareth Shaw, head of money at Which?, noted that part of the rise in banking complaints was likely down to bank transfer scams, which have grown not only in number but in sophistication too over the last year.

He continued: “The industry code on push payment scams was designed to ensure that those who lose money to criminals are reimbursed when they are not at fault, yet a worrying culture of banks blaming victims for falling for these tricks has emerged.”

Shaw called for firms to stop “wriggling out” of giving victims their money back, with banks pushed to publish data on how well they are preventing the harms caused by bank transfer fraud.