Complaints about the banking industry are at their highest level in at least a decade, the Financial Ombudsman Service revealed on Friday.

The organisation released figures demonstrating that in the most recent financial year, consumers raised more than 80,000 cases about banking and payments products with its free resolution service, a substantial rise from the previous 12 months, when just under 62,000 complaints were made.

The increased complaints were largely driven by concerns about current accounts and credit cards, while many also reported worries about potentially having fallen victim to a fraud or scam.

Higher case levels were recorded not just for banks, with the number of new complaints in total reaching over 198,000, up from 165,149 the previous year.

The Service said that indications so far show that this trend shows no signs of slowing.

In April, the organisation said that it expects higher demand for its complaints service during the rest of the financial year.

It anticipates as many as 210,000 overall complaints this year, much higher than the 181,000 new cases it predicted at the end of 2023.

“It’s always concerning when you see cases rise so significantly, particularly when so many people are struggling in the current economic climate," said Abby Thomas, chief executive and chief ombudsman, Financial Ombudsman Service. “Whether someone is the victim of a fraud, struggling with credit card debt, or having issues with their overdraft, they deserve support and understanding from their financial provider."

Rising number of claims management companies

Across all categories, an increasing level of complaints are being brought by claims management companies (CMCs) and professional representatives. They accounted for a quarter of cases in 2023/24, an increase of seven per cent compared to the previous financial year.

The Financial Ombudsman said is has seen examples of both good and bad practice from professional representatives.

Some representatives submit mass claims without determining whether they have merit, whilst others fail to respond to requests for evidence slowing down our investigations, it added.

The Ombudsman has been consulting on a proposed case fee for professional representatives, aiming to make the fee model fairer and better reflect the costs drivers being seen.

Under the proposals, professional representatives in scope would be charged up to £250 to bring a case, reduced to £75 if the case outcome is determined in favour of the consumer.

Speaking about the rise in the number of professional representatives in the complaints process, James Dipple-Johnstone, deputy chief ombudsman of the Financial Ombudsman Service, said: "While they have an important role to play in resolving financial disputes, they can also gain financially from our service without contributing to the running costs. There is sometimes little evidence of due diligence by some representatives to ensure claims they advance have merit. "

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