The Financial Ombudsman Service regularly publishes complaints data to improve transparency and help firms benchmark and improve their offerings. Half-year data covering July – December 2024 shows a total of 141,846 complaints received, representing a 7% increase on the first half of 2024 and a remarkable 49% increase on the second half of 2023.
The published data highlights that 87,692 new complaints were received between January and March 2025. If these volumes stay consistent for April – June, an estimated 175,000 complaints will have been received in the first half of 2025. This again represents a significant rise in new complaints and suggests that increases are showing no sign of slowing down. That begs the question – what’s causing such a sharp but sustained rise?
A focus on banking and consumer credit
For H2 2024, banking and consumer credit were the most featured sectors, making up around 77% (109,155) of all complaints. The sectoral focus is nothing new, with banking and credit complaints representing well over half of the total complaints received in H1 2024 (76%) and H2 2023 (65%). But proportionally the number of banking and credit complaints have risen significantly in that time with complaints across all other sectors remaining relatively stable.
This suggests that the banking and consumer credit sectors are largely responsible for the growth in complaints, and the Financial Ombudsman Service has provided high level feedback over the underlying causes.
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Banking fraud
Fraud and financial scams are key drivers behind the rise in banking and credit complaints. Upheld complaints reflect customer concerns about the controls financial services firms have in place to prevent fraudulent transactions. Complaints that were not upheld generally show examples of firms intervening in the transaction.
Banking fraud complaints were broad in scope, covering everything from authorised push payments (APP) and ID theft to customers being unfairly placed on fraud prevention lists. Transaction/APP style complaints typically reflect incidents where customers felt that banks should have done more to identify and stop the fraudulent transactions. However, it’s important to note that the rules and regulations differ according to the transaction type and when the transaction occurred. This means there isn’t a one size fits all approach to these kinds of complaints, or firms’ actions to address them.
There were also complaints around unauthorised transactions and identity theft. These types of scenarios can lead to distress and inconvenience (D&I) payments due to the nature of the impact on customers. Key examples include:
- situations where customers have been tricked into sharing personal information (such as passwords or PIN numbers)
- incidents where customers say their debit card, credit card or bank details have been used without their knowledge or permission
- identification theft, where fraudsters have obtained goods or services such as a loan or credit card with the customer’s correct details.
With fraud on the rise across the financial sector, firms and regulators are doing more to protect and safeguard consumers. Firms need to make sure their controls and monitoring are robust and fit for purpose. However, even with ongoing developments and focus in this area it is likely to continue to drive Financial Ombudsman Services complaints and remain a key regulatory priority.
Credit affordability
The data shows that many complainants believe financial services firms do not do enough to proactively identify when customers may not be able to afford new credit obligations. Complaints data similarly shows that firms have also provided more credit to existing customers, without assessing whether they had suitable means to make repayments.
The Financial Ombudsman Service upheld a significant proportion of these complaints, covering products such as hire purchase agreements, credit cards, and overdrafts. These outcomes highlight the importance of having robust processes and affordability checks in place. Firms also need to monitor behavioural changes in existing customers to reduce the potential for insurmountable credit and prevent foreseeable harm.
It’s also essential to consider additional safeguards for vulnerable customers. The ability to identify customers in vulnerable circumstances is the vital first step, which will inform the firm’s relationship with that individual or organisation. For banking and credit firms, identifying vulnerabilities such as financial hardship can prevent unaffordable lending scenarios and promote good customers outcomes. Additional team training can help firms spot signs of vulnerability and ensure products are designed to meet the needs of potentially vulnerable customers.
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Motor finance commission
It is clear that an increase in scrutiny and publicity around motor finance commission arrangements materially contributed to the increase in complaints received by the Financial Ombudsman Service. The data supports this with the FOS’ 15-month snapshot of complaints data, covering the period between January 2024 and March 2025, showing that 103,554 complaints relating to motor finance were received, representing 28.6% of all complaints received in this period. In a sample of 10 motor finance firms, nine of them experienced a growth in complaints between H2 2023 and H2 2024. Some received over five times the number of complaints received in the same period the previous year.
The industry currently awaits a Supreme Court decision, which is expected on 1 August 2025 and the outcome may significantly affect the volume of commission-related complaints referred to the Financial Ombudsman Service in the coming months.
In summary
Taking an overall view of complaints received by the Financial Ombudsman Service over the last 18 months, there has been a clear upward trend in complaint volumes. Financial services firms need to make sure they have the skilled resources, data, technology and controls in place to address complaints promptly and appropriately to deliver good customer outcomes. It’s also essential to pay particular attention to vulnerable customers, making sure firms are proactively identifying these cohorts and putting additional support in place as needed.
Assessing the complaints data, and monitoring the Financial Ombudsman Service website for final decisions, can help firms develop a benchmark for what good complaints handling looks like and apply lessons learned, For example, by understanding the type of complaints that are typically referred to the Ombudsman and proactively addressing comparable situations within firms’ own customer bases, this may reduce potential escalation to the Financial Ombudsman Service. This can also inform good practice, helping firms develop effective processes that actively support good customer outcomes in the long term.
For further information on complaints, contact Rory Caird.
