Credit card and car loan complaints surge as unhappy consumers seek redress

Surging numbers of complaints about financial products are coming from professional representatives rather than customers themselves according to the Financial Ombudsman Service (FOS)

As complaints jumped 70 per cent between April and June, those coming from professional representatives including claims management companies, now account for around half of the complaints received by the Financial Ombudsman, compared to just 17 per cent in the first three months of 2023/24.

Consumers registered 74,645 cases about financial products with the FOS in the three months to June 30 this year, compared with 43,953 complaints in the same period last year.

Credit cards were the most complained-about product totalling 18,175 complaints. Most, 15,580, were about irresponsible and unaffordable lending. Of this figure, more than half were brought by professional representatives including claim management companies.

The FOS has expressed concern about mass claims submitted by some representatives, particularly those who fail to respond to evidence requests, which hampers investigations.

The ombudsman warned that using a professional representative does not necessarily lead to a more positive outcome.
It said the latest data showed only 25 per cent of claims brought by professional representatives were upheld, compared to 40 per cent of those brought directly by consumers to the ombudsman for free.

The ombudsman has been consulting on a proposed case fee for professional representatives and will give an update in the coming months.

Abby Thomas, the chief ombudsman, said: “Whilst professional representatives have an important role to play, they must ensure that their cases are well evidenced and have merit.

“If consumers have a dispute with their bank or finance provider they can come directly to our easy-to-use service for free and we will see if we can help.”

The FOS said professional representative complaints centred on unaffordable lending or motor finance.

Hire purchase was the second most complained-about product, with 15,925 complaints, of which around three-quarters relate to motor finance commission. More than 90 per cent were brought by professional representatives.

Earlier this year the Financial Conduct Authority (FCA) said it was carrying out a review of motor finance “discretionary commission arrangements”.