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Surge in consumer complaints about fraud, banking and payday loans

By Vicky Shaw, Press Association Personal Finance Correspondent
Some 388,392 new complaints were recorded in 2018-19, a five-year high, the Financial Ombudsman Service said.

A more than 40% surge in consumer complaints about fraud and scams has helped push the overall number of gripes seen by the financial ombudsman to its highest levels in five years.

The Financial Ombudsman Service (FOS), which resolves cases when consumers and financial firms cannot come to an agreement, said the overall number of new complaints it saw in 2018-2019 increased by 14% annually to 388,392 – despite a decrease in PPI complaints.

PPI (payment protection insurance) is the biggest area of dispute that the Financial Ombudsman Service (FOS) has ever seen, with a total of more than two million complaints recorded.

But for the first time in 10 years, PPI complaints made up less than half of new complaints received, accounting for 46% of the total in 2018-19.

And while grievances about PPI appear to be dying down as the August 29 deadline approaches, complaints about some other products and services are on the increase.

Complaints about fraud and scams increased by 43% in 2018-2019, with 12,195 new complaints received – a record annual total for the service, which started collecting such figures in 2015-16.

Authorised push payment (APP) fraud – where someone is tricked into transferring money directly to a fraudster – is one of the fastest-growing types of fraud, the ombudsman said.

A new voluntary code to help victims of APP fraud is being introduced in May as part of efforts to tackle the issue.

Caroline Wayman, chief ombudsman, said: “People manage their money in a variety of ways, and fraud and scams are becoming ever more sophisticated.

“We know from the complaints we see that banks aren’t always treating victims of fraud fairly.

“They must do better.”

Speaking about complaints generally, she said: “Too often we see that the interests of consumers are not hard-wired into financial services.

“This marks a five-year high in the number of complaints that consumers have brought to us, and the behaviour we’ve seen from some businesses is simply not good enough.

“While we do see examples of businesses responding well to customer concerns, we also see many firms who don’t. Our message to businesses is that practices must improve.”

The FOS also said it saw a “startling” 130% increase in new complaints about payday loans, with nearly 40,000 new complaints brought last year.

Its report for 2018-19 also highlighted several other areas of concern.

Banking and credit complaints were up 8% on the previous year, with 150,000 complaints brought to the ombudsman service.

The FOS said it is clear that banks are not getting a handle on the individual impact IT failures have on consumers – with technology woes locking millions of banking customers out of their accounts last year.

There were 41,069 complaints about current accounts in 2018-19 – a 27% jump on the previous year.

Some 42% of complaints about current accounts dealt with by the financial ombudsman last year were upheld in consumers’ favour – compared with 28% of complaints generally.

And both home emergency cover and buildings insurance saw increases in the number of complaints.

Complaints about buildings insurance lifted by 42% (to 6,723) and complaints about home emergency cover increased by 38% (to 2,751).

And there were 180,507 new PPI complaints, down from 186,418 in 2017-18.

The research also found Millennials aged up to 34 are particularly likely to complain about current accounts and payday loans, while older age groups are more likely to complain about PPI, which was widely mis-sold some years ago.

Here are the products that different age groups are most likely to complain about, ranked from the first to the third most likely, according to the Financial Ombudsman Service:

– Under 25s
1. Current accounts
2. Payday loans
3. Car/Motorbike insurance

– 25 to 34
1. Payday loans
2. Current accounts
3. PPI

– 35 to 44
1. PPI
2. Payday loans
3. Current accounts

– 45 to 54
1. PPI
2. Payday loans
3. Current accounts

– 55 to 64
1. PPI
2. Current accounts
3. Credit cards

– Over 65
1. PPI
2. Current accounts
3. Credit cards