Affordability and car finance leading growth in complaints to Financial Ombudsman Service

Credit affordability and car finance were responsible for a large segment in growth of overall complaints to the Financial Ombudsman Service (FOS) in the second half of 2024.

The newly released figures reveal continued high volumes of complaints with a total of 141,846 complaints received between July and December last year, compared to 95,349 complaints in the same period in 2023 (a 49% increase).

Around 46% of complaints within this period (July – December 2024) were referred to the Financial Ombudsman by professional representatives.

That’s compared to 22% during the same period in 2023.

The FOS confirmed the growth has "mainly been focused on credit affordability and car finance complaints".

James Dipple-Johnstone, interim chief ombudsman at the Financial Ombudsman Service, said: “Behind each case are customers waiting for an answer and we are committed to delivering fair, timely and effective resolutions for consumers and businesses alike.

"The high demand reflected in today’s data underscores not only the vital role our service plays, but also the pressing need for reform to ensure it remains fit for the future.

"That’s why we’re committed to strengthening the dispute resolution system – so it works better for everyone and reflects the needs of today's financial landscape."

Last month, the FOS, which is free for consumers who bring their complaint directly to it, introduced a new fee model to charge professional representatives who bring more than 10 complaints a year.

The move aims to provide a fairer fee arrangement and encourage these representatives to submit better-evidenced complaints, considering their merits more diligently before referring them.

The Ombudsman recently outlined its plans to transform and improve its service to tackle the demand experienced across 2024/25.

This includes increasing its staffing capacity to resolve complaints and "building flexibility into its workforce" so the FOS can respond to changes in demand.

Only a quarter of complaints by professional representatives found in favour of the consumer

The figures provide firm-level complaints data for Q2 and Q3 of the 2024/25 financial year. There were 109,155 complaints from July to December 2024 in the banking and credit sector, compared to 62,139 during the same period in 2023.

In the last six months of 2024 the Financial Ombudsman Service upheld 33% of complaints in consumers’ favour, compared to 36% in the second half of 2023.

However, only around 25% of complaints brought by professional representatives were found in favour of the consumer, compared to around 37% brought directly by consumers for free. The data shows that uphold rates vary per firm.

(FOS) will introduced a £250 charge for claims management companies from April.

Previously, the FOS said there was “little commercial incentive” for these firms to bring forward only strong cases.