Banks drive finance complaints up by a fifth as ‘unaffordable’ credit cards slammed
Issues with banking and credit cards drove official finance complaints up nearly a fifth in the second half of last year, new figures show, as customers were hit by fraud and “unaffordable and irresponsible lending”.
Data published by the Financial Ombudsman Service (FOS) revealed that it received 95,349 complaints between last July and December, up 19 per cent from the same period in 2022.
Barclays had the highest number of complaints of any one business at 5,207. The bank has been the subject of more cases than any of its rivals in each six-month period since the second half of 2019, coming under fire for poor customer service, branch closures and “debanking”.
A spokesperson for the bank said: “We do not want customers to have cause to complain and we remain focused on addressing the root cause of complaints, as well as reducing the number of complaints we receive.”
Barclays was followed by motor finance provider Moneybarn with 4,495 complaints. Moneybarn is part of Vanquis Banking Group, which issued a profit warning in March following a surge in third-party complaints mainly linked to credit cards – the vast majority of which it said were not upheld. Vanquis Bank had 2,743 complaints.
Moneybarn was trailed by HSBC UK (3,182), Natwest (2,999), Santander UK (2,997), Lloyds Bank (2,980), Bank of Scotland (2,963) and Revolut (2,446).
During the period, the FOS upheld 36 per cent of complaints in the consumers’ favour, up slightly from 34 per cent in the second half of 2022.
Complaints tied to current accounts and credit cards jumped by nearly 12,000 and represented more than 40 per cent of the total figure. Current account complaints mainly centred around fraud and scams.
Credit card complaints hit an all-time high of 5,660 in the final three months of the year, which the FOS said was driven by an rise “in perceived unaffordable and irresponsible lending”.
Consumers have slammed lenders for what they argue are excessively high interest rates and credit limits.
General insurance cases also rose, particularly car or motorcycle insurance complaints. The FOS said the increase was partly driven by “continued delays in firms being able to put things right when a claim is made, as well as insurer’s valuation of a vehicle”.
FOS chief executive Abby Thomas said: “In light of the continuing economic challenges people face, it’s always concerning to see complaint levels continue to rise.
“People’s relationships with their banks and insurers are incredibly important, with many relying on these businesses for their homes, their cars and their livelihoods. That’s why I’m determined to ensure firms create an environment which is fair and transparent for all consumers.”
A spokesperson for banking trade body UK Finance commented: “Credit card companies and lenders must comply with strict regulatory rules to assess whether lending is affordable and they also provide a wide range of support to anyone concerned about their finances or repayments.
“Meanwhile, the financial services industry prevents over £1bn of fraud taking place every year, and is currently the only sector which reimburses victims.”
A spokesperson for the Association of British Insurers said the industry was “committed to providing exceptional customer service and settling all legitimate claims as quickly as possible”. They added: “We and our members will work with the FOS to understand where any learnings can be made.”