Context
In its latest Ombudsman News (edition 193), FOS has shared details of its work during the financial year and insight into the sector and product specific complaints they have seen. The issues covered include the increase in travel insurance complaints (see above), its latest annual complaints data, and information for professional representatives (e.g., claims management companies).
Key points to note and next actions
In the financial year 2023/24 FOS received 198,798 new complaints in 2023/24 compared with 165,149 the previous year. Complaints about current accounts, credit cards, fraud and scams have driven a significant increase in banking and payment complaints. On average, across all financial products, the FOS upheld 37% of the complaints it resolved, slightly higher than the 35% recorded in 2022/23.
Complaints about delays, declined claims and claim values in car/motorcycle insurance have increased by 38% to 16,322 compared to last years’ annual data. The uphold rate also increased for this product, to 38% in 2023/24, compared to 30% in 2022/23. The rise in these complaints appears to be due to insurers delaying claim payouts, contractor availability impacting upon the speed of repairs, and an inability to source materials. Consumers have also raised more complaints because they were unhappy with the value or the amount of the payout they received following an insurance claim.
Last year, buildings insurance was in the top five most complained about financial products, but has been replaced this year by complaints about conditional sale (motor). Hire purchase (motor) is the third most complained about product seeing 21,441 cases in 2023/24 compared with 11,446 in the year before. Motor finance commission complaints accounted for most of these cases.
There has been an increase in the number of complaints brought by claims management companies and other professional representatives, up to 25% in 2023/24 from 18% in 2022/23. Where complaints are upheld, professional representatives take a proportion of the redress FOS awards to customers. FOS reminds that customers can bring their case directly to FOS for free, and therefore keep 100% of any redress awarded to them.
The data shows that many of these complaints are submitted by professional representatives, accounting for around 90% of the cases they received. Firms will recall that in January 2024, the FCA announced it was carrying out a review of “discretionary commission arrangements” (DCAs). As part of this, it has paused the eight-week deadline for motor finance firms to provide a final response to consumer’s complaints. FOS has recently consulted on a proposal to charge CMCs and professional representatives who send cases to them. The proposal is to make the model fee fairer and better reflect the cost drivers being seen.