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Fraud and scam complaints soar by 40%

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The Financial Ombudsman Service (FOS) recorded a 40% rise in fraud and scam complaints during the 2018-19 financial year, while complaints about payday lenders soared by a staggering 130%.

Complaints about financial services companies reached a five-year high, with 388,000 new complaints registered by the FOS during 2018-19, a 14% increase year-on-year.

The FOS, which is responsible for resolving complaints between financial services businesses and their customers, recorded a 40% rise in fraud and scam complaints – indicating a growing trend that continues to affect people across the UK. More than 12,000 complaints were received in this area.

Gareth Shaw, head of money at Which?, argues that bank transfer fraud is “spiralling out of control”, resulting in consumers losing life-changing sums everyday. They then face a gruelling battle to get their money back from the banks.

“Banks have just two weeks to sign up to the new industry code, which will only be deemed a success if they finally halt this worsening crime by offering better protection to their customers, while swiftly and fairly reimbursing all those who lose money through no fault of their own,” he added.

Bank IT failures

IT meltdowns at banks also affected millions of customers and no doubt contributed to the 149,933 banking and credit complaints logged by the FOS during the period. This represents a 39% increase year-on-year.

“Regardless of whether such problems are avoidable, we’ve stressed to banks that, in putting things right, they need to consider the impact on individual customers – which in some cases had been significant,” explained Caroline Wayman, chief executive at the FOS.

Payday lenders

Complaints about payday lenders also rose to a five-year high. Around 39,700 complaints were made in relation to payday loans, up from 17,000 the previous year. This represents a staggering 130% year-on-year increase. It follows the collapse of well-known payday lender Wonga last August.

This also fits with an 89% rise in complaints about consumer credit logged during the 2018-19 financial year.

In addition, the mis-selling of payment protection insurance (PPI) continues to haunt the banking sector, with more than two million complaints logged over the years. The FOS pointed out that 46% of all new complaints made in 2018-19 concerned PPI.

Wayman said the past 12 months had been the busiest period for the FOS in five years.

“All in all, we dealt with nearly 1.7 million phone calls, emails and letters from people concerned about their money. These are big numbers,” she said.

She highlights the surge in consumer credit complaints as one of the biggest trends during the year.

“What we’ve seen in this sector has been unacceptable: in too many cases, customers have been left to struggle with unsustainable debt. Looking at short-term lending in particular, the proportion of complaints we upheld – around six in every ten – shows diligent lenders have been the exception.

“At the end of a volatile year that saw lenders collapse as a consequence of past unfairness, it’s vital that those remaining don’t allow history to repeat itself,” Wayman explained.