Complaints about financial firms have surged by nearly 60% in the past year, excluding PPI cases, according to the ombudsman service.
Gripes about banking products, such as current accounts, and complaints about unaffordable loans were behind the big upswing.
The Financial Ombudsman Service (FOS), which resolves disputes when consumers and firms cannot agree, said the overall number of new complaints received increased by 2% annually in the financial year 2020/21 to 278,033.
But when PPI (payment protection insurance) was excluded from the total, there was a 58% increase in the volume of complaints received.
There were 235,993 new non-PPI complaints recorded, compared with 149,315 non-PPI complaints received in 2019/20.
Although the deadline for complaining directly to financial firms about PPI has passed, people have still been able to take their complaint to the FOS if they were unhappy with the result.
Some 42,040 complaints about PPI were received in the last financial year, compared with 122,153 in 2019/20.
The sharp increase in non-PPI complaints has largely been driven by a 66% increase in complaints about banking and credit products, with 170,648 complaints received in 2020/21, the service said.
Within this category, current accounts were the most complained about product and unaffordable lending was the most complained about issue.
Quite often, banks have relied on a system or a process, when picking up the phone, or seeking information direct from the customer, would have made all the difference, it said.
The service also received more than 18,000 complaints from victims of fraud and scams. About 40% of the cases it saw involved authorised payment fraud including authorised push payment or APP scams, where people were tricked into transferring money to a fraudster.
While consumers’ actions in some cases mean they might not be eligible for a refund, if someone has been a victim of an APP scam, firms’ starting point should be to reimburse them, the service said.
The FOS also recorded a 36% increase in complaints about insurance, with 44,487 complaints received in 2020/21.
And complaints about investments and pensions nearly doubled, with a 91% increase taking the number of gripes to 20,854.
The service said 94% of resolved complaints about special event insurance – which covers wedding insurance – were upheld.
Four out of 10 (40%) non-PPI complaints resolved last year were upheld in consumers’ favour. When PPI was included, the uphold rate fell to 31%.
The service said it received nearly half-a-million inquiries last year as the coronavirus pandemic had an impact on lives and livelihoods. In many cases, problems were resolved without a formal complaint.
Its report said: “Many complaints might have been avoided with better communication. While the pandemic’s impact on businesses’ operations has often been unavoidable – and is something the service has felt too – managing customers’ expectations effectively can help generate goodwill and pragmatism, rather than distrust and frustration.”
Nausicaa Delfas, interim chief executive and chief ombudsman of the FOS, said: “Over the past year, we have seen demand for our service increase significantly, and our teams are working to provide resolutions in cases as quickly as they can.
“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.”
A spokeswoman for the Association of British Insurers (ABI) said: “From paying valid claims as promptly as possible, to providing a range of extra support to customers, insurers are continuing to work hard to support policyholders through this unprecedented period.
“In 2020, 2.8 million claims were settled for motor and home insurance, averaging the equivalent of £28 million per day. Whilst a very small fraction of customers make complaints, and even fewer are upheld, insurers will always do everything they can to minimise problems and resolve any issues as quickly as possible.”
A UK Finance spokeswoman said: “The banking and finance industry is committed to providing quality customer service, and if things do go wrong, putting them right as soon as possible.
“The timeframe covered by this data includes a challenging period of Covid-19-related lockdown measures.
“As a result, firms faced significant additional demand and capacity constraints with exceptionally busy phone lines.
“Businesses worked hard to ensure customers could access essential services during this time, and will continue to do so.
“Complaints data is important to help customers to compare the quality of service they receive, and also to help businesses make improvements to the service that they provide.”