Banking and credit complaints have helped to drive a rise in customer gripes received by an ombudsman service.

Overall, the number of financial complaints received in the second half of 2023 rose by nearly a fifth compared with the same period a year earlier, the Financial Ombudsman Service (FOS) said.

The free-to-use service, which was set up to resolve disputes between consumers and financial businesses, received a total of 95,349 complaints between July 1 and December 31 2023, which was 19.3% higher than the 79,921 complaints received in the same period in 2022.

I’m determined to ensure firms create an environment which is fair and transparent for all consumers

Abby Thomas, chief executive, FOS

Banking and credit complaints were the main driver of the rise, the service said, with current accounts and credit cards making up more than 40% of cases within this sector. Current account complaints continue to be dominated by disputes over fraud and scams, it added.

There were 62,139 new banking and credit complaints in the second half of 2023, up from 50,346 in the second half of 2022.

The ombudsman received 5,660 credit card complaints in the last three months of 2023 – the highest number on its records going back to the start of the financial year 2014/15.

This was driven by an increase in perceived unaffordable and irresponsible lending by financial firms, the ombudsman said.

Some 3,086 of the credit card complaints during the quarter were due to perceived unaffordable or irresponsible lending by financial firms.

Comparatively, in the same quarter a year earlier, there were 3,216 credit card complaints, of which 665 were about irresponsible or unaffordable lending.

Customers who are worried about their credit card repayments should get in contact with their provider as soon as possible to discuss the options for help, support will be available and tailored to your individual circumstances

UK Finance spokesperson

The service also saw an increase in general insurance cases, with car and motorcycle insurance complaints rising particularly sharply.

This is partly due to continued delays in firms being able to put the situation right when a claim is made, as well as insurer’s valuation of a vehicle, it said.

There were 22,845 new general insurance/pure protection complaints in the second half of 2023, compared with 19,346 during the same period a year earlier.

Abby Thomas, chief executive and chief ombudsman at the FOS, 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.

“If customers don’t feel they’ve been treated fairly, they can come to our free and independent service, and we’ll investigate their complaint.”

These figures paint a sorry picture of the customer experience in financial services, especially at a time when consumers are battling a cost-of-living crisis

Rocio Concha, Which? director of policy and advocacy

In the last six months of 2023, the ombudsman service upheld 36% of complaints in the consumers’ favour, up from 34% in the second half of 2022.

A spokesperson for UK Finance said: “Financial services firms take complaints seriously and are committed to providing good outcomes for customers.

“Credit card providers must comply with strict Financial Conduct Authority rules to assess whether lending is affordable, and are required to intervene where a customer has been in persistent debt for a period of time.

“Firms are committed to helping anyone concerned about their finances.

“Customers who are worried about their credit card repayments should get in contact with their provider as soon as possible to discuss the options for help, support will be available and tailored to your individual circumstances.”

Rocio Concha, Which? director of policy and advocacy, said: “With more complaints made, more businesses complained about and more cases upheld by the ombudsman, these figures paint a sorry picture of the customer experience in financial services, especially at a time when consumers are battling a cost-of-living crisis.

“It’s concerning to see such a significant rise in current account complaints about fraud and underlines the need for new rules that should see the vast majority of scam victims being reimbursed from October.”

A spokesperson for the Association of British Insurers (ABI) said: “Insurers continue to do all they can to support customers and are committed to providing exceptional customer service and settling all legitimate claims as quickly as possible.

“When a complaint is made, insurers will always aim to deal with them swiftly. We and our members will work with the FOS to understand where any learnings can be made.”