Fraud and other banking complaints reach 10 year high

Banking and payment complaints at the Financial Ombudsman Service (FOS) are at their highest level in a decade, driven by a surge in fraud and scams cases. 

The FOS settles disputes between financial firms and their customers, offering an impartial - and free - alternative to the courts. But the service is groaning under the weight of new complaints about banking and payment products. 

Here, Which? looks at the numbers and explores whether the FOS can cope with an avalanche of complicated fraud cases. 

What's behind the surge in complaints?

The number of banking complaints jumped to 80,137 in the 2023-34 financial year (up from 61,995 in the previous year). 

The two most complained about products were current accounts (related to administration and customer service, as well as fraud and scams) and credit cards (most of which related to unaffordable or irresponsible lending). 

The remaining top five - hire purchase (motor), car/motorcycle insurance and conditional sale (motor) - all saw year-on-year increases. Recent analysis of FOS complaints data by Which? identified a worrying trend of insurers causing 'distress and inconvenience' to customers.

Across all financial products, the FOS upheld 37% of complaints it resolved in favour of consumers, up from 35% in 2022-23.

Fraud complaints reach record high

Fraud and scam cases hit 27,312 complaints – the most since they started collating this data five years ago. Around half of which were authorised push payment (APP) scams, where victims are tricked into sending money to a fraudster posing as a genuine payee.

Most of these complaints fall into current accounts, followed by credit cards and e-money. 

The FOS may see another spike in fraud complaints once the new reimbursement scheme for APP fraud is implemented, from 7 October 2024, as it will apply to more than 1,500 firms which will split the cost of reimbursement 50:50 (between sending and receiving firms), capped at £415,000. 

These new rules should mean the vast majority of fraud victims are reimbursed and treated more fairly and consistently, though some are calling for a cap of just £30,000. 

Rocio Concha, Which? Director of Policy and Advocacy, said: 'Ministers must resist lobbying from small sections of the banking and payments industry that want to slash reimbursement limits and weaken protections for scam victims. These firms must be told it is time to take responsibility, stop enabling fraudsters and put in place effective security measures to protect their customers.'

• Find out more: what to do if you're a victim of bank transfer fraud

Customer satisfaction rates still falling

Which? has previously explored declining satisfaction rates by people using the FOS and the most recent data shows that these are still falling: to 81% for upheld cases (was 88% in 2021-22) and 18% for non-upheld cases (was 36%). 

The FOS says the longer it takes to resolve a complaint, the less likely a customer is to be satisfied with the service. 

It has been able to reduce the time it takes to resolve a case from 4.8 months in 2022-23 to 2.96 months by the last three months of 2023-24, however, concerns that it is struggling to wade through complex fraud cases remain. 

A spokesperson for the FOS said: 'We do recognise there’s more work to do to ensure people whose cases are not upheld remain satisfied with our service. That’s why we’re committed to continuing to improve the quality of our service – and we’re pleased with the progress we are making. Customers are often dealing with incredibly stressful issues, at very difficult times in their lives. 

'For that reason, we’ve worked hard to significantly reduce the time it takes to resolve a case. We’ve also achieved a quality score for investigations of 92%, seven percentage points above our target. In the year ahead we will continue to improve the customer experience – building on our new customer call hub, investing in our casework teams, and developing our digital experience so customers can raise and monitor their cases more quickly and easily.'

Get Which? Money magazine

Find the best deals, avoid scams and grow your money with our expert advice.

Sign up now

A quarter of cases bought by professional reps

The FOS says complaints are rising across the board, with 198,798 new complaints in 2023-24 compared with 165,149 the previous year. 

Many of these are being brought by claims management companies (CMCs) and professional representatives, which accounted for 25% of cases in 2023-24 (up from 18% in the year before). 

The FOS cited examples of bad practice from professional representatives, some of whom 'submit mass claims without determining whether they have merit'. It has recently proposed charging representatives up to £250 to bring a case, reduced to £75 if the case outcome is determined in favour of the consumer.

How to complain to the FOS

You don’t need to use a third party to bring a complaint to the Financial Ombudsman Service (FOS), as it’s free and easy to use. 

As an independent public body set up to help financial firms in the UK and their customers resolve disputes in an impartial way, it offers an essential alternative to court action. 

If you’ve made a complaint to a financial firm and you’re not satisfied with its final response, you have six months to take your complaint to the FOS. Once your case has been assigned, there are two stages to be aware of:

1. First, an investigator will attempt to sort out the complaint, after hearing from both parties. 
2. If either party rejects this initial decision (which is typical of complex fraud cases) the case is referred to an Ombudsman for a ‘final decision’. This is legally binding if you accept it, though if you reject it, you are still free to pursue the dispute through the courts. 

Find out more:  how to take a complaint to the Financial Ombudsman Service

Which? Money Podcast

Join us on our weekly audio show for the latest money news and personal finance hacks to help make you better off.

Listen now