Record year for Financial Ombudsman service as complaints continue to rise

Monday, 29 July 2024

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Complaints and disputes to Financial Services Complaints has reached a record high since the service started in 2011.

Complaints were up 6% to 1426.

Complaints about lenders made up the greatest proportion of complaints investigated.

Complaints and disputes to Financial Services Complaints has reached a record high since the service started in 2011.

Complaints were up by 6% on the previous year to 1426 and new disputes received (cases the service formally investigates) by 10% at 359. There was also a 33% increase in completed investigations.

Financial Services Complaints Limited (FSCL) is one of four complaints scheme to which consumers can complain if they believe they’ve been wronged by a financial services company.

Financial Ombudsman Susan Taylor said “although the pace of growth has slowed this year, all our numbers – complaints and disputes – were new records for our service”.

Complaints about lenders made up the greatest proportion of complaints investigated as some people struggled with managing loans, particularly car, personal and small business loans.

Of the cases formally investigated, the largest proportion of complaints were about consumer credit products at 29%, followed by credit cards at 14% and mortgage loans at 11.5%.

Complaints against financial advisers (18%), insurers (14.5%) and card issuers (14%) were also up in numbers on last year.

“The steady increase in complaints reflects the challenges in the wider economic environment,” Taylor said.

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“We expect this high level of complaints to persist as long as economic conditions remain difficult. The new rules increasing our financial loss compensation to $500,000 (previously $350,000), which took effect in July, could also lead to a further rise.”

Of the wide variety of complaints seen by FSCL, some of the common issues for consumers were around financial hardship, miscommunication, fraud and scams, and business loans.

“Under the Credit Contracts and Consumer Finance Act 2003 lenders must consider hardship applications from borrowers whose financial circumstances have unexpectedly changed and offer temporary relief, but not if borrowers cannot resume payments,” Taylor said.

“It’s important for consumers to contact their lender or financial service provider as soon as they experience hardship or have a complaint as the earlier this is done, the quicker it will likely get resolved. If it can’t be resolved with the financial service provider, then they can bring the complaint to us.”

Miscommunication was also central to many complaints FSCL investigated, which included breakdowns in passing on important information, poor understanding of clients, and ambiguous or poorly worded communication.

In a recent case, a lender agreed to reduce the loan amount for a woman who had been added as a co-borrower while in an abusive relationship.

“Although the lender had not done anything wrong, they could see that the right thing to do was to significantly reduce [the woman’s] debt. We were pleased to see a lender taking a compassionate and pragmatic approach to this situation,” Taylor said.

If people have a problem with a financial service provider, they can make a complaint to FSCL.