Credit card complaints hit record high, says Financial Ombudsman Service
Nearly three quarters of the credit card and unaffordable lending complaints highlighted in the new figures were brought by professional representatives.
Complaints about credit cards hit a record high in the last three months of last year, says the Financial Ombudsman Service (FOS).
Between October 1 2023 and December 31 2023, consumers made 5,660 complaints about their credit cards - the highest level for a three-month period since the FOS started keeping records in the financial year 2014/15.
The FOS, which helps sort out problems between consumers and their financial providers for free, said that 3,086 of these complaints were because people thought the lending by financial firms was unaffordable or irresponsible.
In the same three months the year before, there had been 3,216 credit card complaints, with 665 about irresponsible or unaffordable lending.
Nearly three quarters of the credit card and unaffordable lending complaints in the new figures were made by professional representatives like claims management companies and law firms. This is up from a quarter of these complaints a year earlier.
The FOS said that many consumer complaints have shown that people think financial providers should have done more about very high credit balances, high credit limits or offered lower interest rates.
Abby Thomas, the boss of the FOS, shared her worries: "Given that many people are struggling in the current economic environment, it's concerning to see such a significant rise in credit card complaints."
She also said that having a lot of debt can be very stressful and it's really important that companies that lend money treat their customers well and clearly.
"Lenders have a duty to support their customers whatever their circumstances and are obliged to help people who are struggling with debt."
The ombudsman got almost 7,500 complaints about lending that seemed unfair or too much to pay back recently. Out of these, 70% were from professional helpers.
When the ombudsman sorted out these problems, they agreed with the professional helpers 14% of the time but with regular people who complained on their own 44% of the time.
Viv Kelly, who works at the FOS for things like loans and credit cards, said: "The vast majority of unaffordable lending complaints are being brought by professional representatives. While professional representatives have an important role to play, we're currently seeing some poorly evidenced complaints."
She explained that when complaints don't have good proof, they might not win as often as when people talk to the ombudsman themselves.
"Consumers don't need to use a professional representative to bring a complaint to our service. People can come directly to our free, independent service and we'll see if we can help resolve their complaint."
In the last quarter of 2023, the ombudsman received a total of 47,868 new complaints across all categories. This is an increase from the same period in the previous year when it received 41,303 new cases.
Apart from credit cards, the other four products that received the most complaints were current accounts, hire purchase (motor), car/motorcycle insurance and buildings insurance. All these categories saw an increase in complaints compared to the previous year.
Current accounts continue to be the product with the most complaints, with 7,804 recorded in the latest period. The main reason for these complaints was fraud and scams, according to the ombudsman.
Credit cards are the second-most complained about product.
Hire purchase (motor) is the third most complained about product, with 5,419 complaints in the most recent quarter. About half of these complaints were about motor finance commission, the ombudsman said.
The Financial Conduct Authority (FCA) has recently announced a review of past motor finance commission arrangements and sales. As part of this, it has put on hold a deadline for motor finance companies to provide a final response to customer complaints about certain commission models.
It has also extended the time for customers to approach the ombudsman if their issues have not been resolved by the firms.
Car and motorcycle insurance is the fourth most complained about product with 4,123 complaints in the latest quarter.
Buildings insurance, ranking fifth, received 1,666 complaints.
