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Rise in FOS complaints paints ‘a sorry picture’ for customers

The Financial Ombudsman Service (FOS) received a fifth more complaints in the second half of 2023 than it did the year before, data reveals.
In total, the dispute resolution service investigated 95,349 complaints between 1 July and 31 December 2023, a rise from 79,921 complaints in the same period of 2022.
Of those complaints, a third (36%) were upheld in favour of the customer who brought the case to the service, roughly the same ratio as in the last six months of 2022 (34%).
However, the number of businesses complained about surged in 2022. From last July to December, there were 236 companies with disputes raised against them, and just 212 the year before.
While the main source of customer grievances was about current accounts and credit cards (40%), 22,845 FOS complaints were about insurance policies.
Car or motorcycle insurance complaints had a “sharp rise”, as delays in putting things right and a claim’s valuation cropped up for motorists.

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‘No surprise that motor insurance complaints increased’
Rocio Concha, Which? director of policy and advocacy, said: “It won’t be a surprise to many drivers that motor insurance complaints have also increased.
“Which? research found that a third of insurers were rated poorly by claimants for payouts, despite repeated warnings from the Financial Conduct Authority [FCA] for insurers not to undervalue cars.”
The figures follow a crackdown by the Association of British Insurers (ABI) on the disparity between motorists who pay their premiums monthly and those who pay in a lump sum.
An investigation by the consumer champion found the average interest rate added to premiums for paying monthly came to 23.37% for the 27 providers who disclosed their prices. However, some motorists were charged up to 40% APR for the privilege.
Consumer Duty ‘not having the desired effect’
Its current pricing has been described as a “tax on the poor” by Matt Brewis, the FCA’s head of insurance. Car claims and scams are set to dominate the rest of the caseload that the ombudsman faces in the next financial year.
The service anticipates over 181,000 complaints, and Concha believes the 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”, she added.
Concha said: “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.
“Underpinning financial firms’ behaviour is the Consumer Duty, which was brought in to drive up standards. Judging by these figures, which cover the first five months after the duty was introduced, it is not currently having the desired effect.
“The FCA must be ready to show its teeth by taking tough action against businesses that flout the rules.”