Uptick in complaints to Financial Ombudsman driven by banking and credit sector

Commenting on the latest complaints data from the Financial Ombudsman Service (FOS), Erin Sims, financial services senior analyst at RSM UK said:

“The total number of new complaints to the FOS jumped 53% from 165,957 in 2023 to 254,218 in 2024. This was driven by the banking and credit sector, with complaints up 83% from 110,235 in 2023 to 201,776 in 2024. This surge was largely due to a growing number of disputes related to authorised push payment (APP) fraud. The introduction of the Compulsory Reimbursement Scheme, which mandates banks to reimburse victims of APP fraud under certain conditions, has likely encouraged more consumers to challenge decisions and escalate unresolved cases to the FOS. While the scheme aims to protect consumers, it has also created a new layer of complexity in determining liability, leading to more disputes. Collaborative efforts between financial institutions, telecoms and tech platforms to disrupt fraud networks at the source will be essential to reduce fraud at scale and restore consumer confidence in digital payments.

“Investment-related complaints have also seen an uptick, likely reflecting the turbulent economic environment and volatile financial markets in late 2024. With inflationary pressures, geopolitical tensions and market uncertainty, we anticipate increased scrutiny of financial advice and transparency of risk disclosures will continue.

“Motor finance complaints, particularly those related to undisclosed or unfair commission arrangements, continue to be a major issue. Following heightened regulatory focus and media attention, consumers have become more aware of potential misselling in this area. The FOS has seen a surge in complaints where consumers allege they were not informed about commission structures that may have influenced the cost of their finance agreements. As we await the Supreme Court’s ruling on motor lender’s discretionary commission payments, we may see complaints continue to rise in the first half of this year.”