Financial firms dealing with complaints pay out £243m in the first half of the year
Financial services firms have disbursed £243 million in redress during the first half of this year as they dealt with 1.86 million complaints. The Financial Conduct Authority (FCA) disclosed these figures, indicating that the average redress for upheld complaints was £201.
Since the peak of complaints about payment protection insurance (PPI) in 2020, the number of half-yearly complaints has stabilised between 1.8 million and 2.0 million. Notably, complaints concerning pensions, insurance, and investments saw an uptick between the latter half of last year and the first half of 2024, whereas banking, credit cards, and home finance-related complaints decreased in the same period.
Among the most frequently complained about products were current accounts, motor and transport-related issues, and credit cards. While the complaints related to these products decreased slightly, the percentage of upheld complaints by firms remained steady at 57% from the second half of 2023 to the first half of 2024.
In a related development, the Financial Ombudsman Service (FOS) reported a surge of over 40% in complaints during the first half of this year compared to the same period last year. Notably, the service received 133,019 complaints between January and June 2024, a significant increase from 93,114 complaints in the corresponding period in 2023.
The FOS upheld 35% of complaints in consumers’ favour during the first half of 2024, as compared to 37% in the same period in 2023. Banking and credit remained the most complained about sector, with consumers raising issues about credit cards, unaffordable lending, car finance, fraud, and scams. Professional representatives lodged over half of all banking and credit complaints during this period.
Abby Thomas, the chief executive and chief ombudsman at FOS, emphasised the importance of businesses prioritising consumer welfare and maintaining transparency in their practices. She noted that while professional representatives play a crucial role, they must ensure that their cases are substantiated and justified.
Overall, the financial sector faces ongoing challenges in addressing customer complaints and upholding fair practices, as highlighted by the recent data released by both the FCA and FOS.
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Insights and Summary:
The financial industry continues to grapple with a significant volume of complaints from consumers, with the FCA reporting a substantial payout of £243 million in redress in the first half of the year. Issues ranging from PPI to banking services and investments have contributed to this high number of complaints. On the flip side, the FOS has noted a rise in complaints, highlighting the importance of businesses focusing on customer-centric approaches and transparency. As the sector works towards addressing these challenges, there is a clear need for improved practices and strong consumer protection measures.