The Financial Ombudsman Service, the service that settles complaints between customers and businesses, has revealed that in the last financial year, consumers lodged 305,726 complaints about financial products with independent service – the highest number in the past six years.
The last time the Financial Ombudsman received more complaints was during the PPI issue in 2018/19 (388,392). Motor finance commission, fraud and scams, and credit cards specifically saw a significant rise in complaints, with the Ombudsman’s Annual Report and Accounts revealing that this has been caused by unaffordable lending, causing substantial pressure on the redress system.
Pressure on the redress system is one of the key reasons the Financial Ombudsman is working closely with HM Treasury (HMT) and the Financial Conduct Authority (FCA) to modernise the dispute resolution system- and the service’s role within it – to ensure consumers can continue to access a quick and high-quality alternative to the courts.
High demand can impact the speed with which the Financial Ombudsman can handle complaints. The service is tackling this challenge by recruiting additional case workers, modernising its structure and transforming digital services.
James Dipple-Johnstone, interim chief ombudsman at the Financial Ombudsman Service, said: “Financial services have evolved significantly since we were set up 25 years ago. New financial products, the digitalisation of services and an increase in fraud and scams mean that we now see high levels of demand and an increasing number of complex cases.
“That is why we are working closely with HMT Treasury and the FCA to ensure the system – including the vital role our service plays within it – is fit for the future.”
Overall, in 2024/25, the Financial Ombudsman resolved 227,253 complaints – an 18 per cent increase on 2023/24 – while also reducing its stock of older cases.
Comparing 2023/24 to 2024/25
The 2024/25 caseload is a 54 per cent increase when compared to the 198,798 complaints the Financial Ombudsman reported it received from consumers in the previous year.
Around half of these complaints were brought by professional representatives. That’s compared to the 25 per cent brought by professional representatives during the 2023/24 financial year. This growth has mainly been focused on credit affordability and car finance complaints.
Some of these individual complaint categories have risen significantly across all sectors when compared to the previous year.
Complaint issue 2024/25 2023/24 Motor finance commission 73,328 12,604 Irresponsible/unaffordable lending 71,68533,221 Fraud and scams 35,416 27,675
In 2024/25 the Financial Ombudsman Service upheld 34 per cent of complaints in the consumers’ favour, compared to 37 per cent in 2023/24. Around 27 per cent of complaints brought by professional representatives were upheld. Roughly 37 per cent of cases brought directly by consumers were upheld.
Modernisation in progress
The Financial Ombudsman’s finite resources were also spent handling thousands of withdrawn and abandoned cases, mainly from professional representatives. The service recently introduced charges for professional representatives who bring more than 10 complaints a year. The move aims to bring better balance to the organisation’s fee model and to encourage representatives to submit better-evidenced complaints, considering their merits more diligently before referring them.
The decision to charge professional representatives forms part of the organisation’s wider transformation as it continues to modernise its structure, strengthen core operations, improve responsiveness and transform its digital services.
The Financial Ombudsman will also maintain the £60million worth of annual reductions (excluding inflation) in case fees and annual levies into 2025/26 – frozen for a second year to keep costs lower for industry.
Jenny Simmonds, interim chief executive at the Financial Ombudsman Service, said: “Although we resolved thousands of cases last year, we know there’s more to do, which is why we are driving forward ambitious plans to transform our service.
“We are modernising our ways of working, investing in new tools and technologies, and building flexibility into our workforce.
“This modernisation programme, alongside reform to the wider dispute resolution system, will create a trusted and effective financial ombudsman, which in turn enables predictability and the confidence to support a strong economy.”
