The impact of the unprecedented, on-going global pandemic continues to be felt across all industries as businesses and consumers attempt to recover from its significant effects. Given the rise in scams during this period, it’s not surprising to learn about the staggering levels of consumer complaints the Financial Ombudsman Service (FOS) has received over the last 18 months. The sudden shift to remote working from March 2020 made operations more challenging for all, leading to unacceptably high waiting times for many consumers.
The scale of the problem was laid bare in the FOS’s annual report for 2020/2021 (the Report). Here is a brief overview of some of the key insights and trends identified in the Report.
Key figures at a glance
The number of new complaints received by the FOS (excluding PPI) was 63% higher than originally planned. The FOS received a total of 237,106 non-PPI complaints – significantly more than the 145,000 it had expected.
- PPI complaints continued to decrease and made up just 15% of complaints. The number of complaints received was just 42,040, compared to the 100,000 it had expected. This was down from 44% in 2019/2020 and 78% from its peak in 2013/2014.
- While numbers of PPI complaints were down, section 75 Consumer Credit Act 1974 and chargeback claims, and complaints about authorised push payment (APP) scams and frauds significantly increased. This reflects the current economic climate and challenges of doing business online.
- 40% of all complaints were upheld, excluding PPI. Complaints about wedding event insurance had the highest upheld rate across all products, at 94%, which should offer some relief to those affected.
- The FOS is working hard to reduce its current backlog of cases. In the first quarter of 2021/2022, it resolved approximately 4,500 more cases than originally planned in its general casework. The FOS expects its high-volume team to resolve 32,500 cases relating to just two businesses, and 10,000 other complaints.
Themes and trends
The key themes and trends identified in the Report reflect wider customer issues that the pandemic has caused or contributed to.
- The FOS reports that operational pressures on financial institutions in 2020/2021 led to higher numbers of consumer complaints about administration, customer service and online banking than the previous year. This increase correlates with the transition to remote and online working.
- Many customers made complaints about unsuccessful claims for refunds on cancelled holidays and events due to Covid-19. This meant that section 75 Consumer Credit Act 1974 and chargeback claims were very high. Complaints about travel and specialist event insurance increased by a staggering 240%.
- While many SMEs received financial support from the Covid-19 emergency loan schemes, the FOS received thousands of complaints from businesses who were turned down by finance providers or, alternatively, experienced delays in receiving vital funds.
- The number of complaints regarding APP frauds also increased and the FOS stated that it continued to uphold a large number of complaints about how banks responded to victims of APP frauds. Notably it reported seeing inconsistencies in how signatories of the Contingent Reimbursement Model were applying this voluntary code, which was established in May 2019.
- More recent data, which was published by the FOS on 24 September 2021, highlighted that fraud and scams complaints are still one of the largest sources of complaints. The figures show that the number of people affected by fraud and scams rose by 66% in the first quarter of the 2021/22 financial year, going from 3,028 to 5,025 cases. We can expect this increase to continue.
The year ahead
Looking ahead, it’s clear that complaints relating to the fallout from theCovid-19 pandemic will continue to keep the FOS busy for some time to come. As a result, one of the FOS’s main stated aims for the 2021/22 financial year is to reduce waiting times for consumers, especially for complaints that haven’t been assigned to an investigator.
Following a consultation on 4 October 2021, the FOS announced temporary changes to reporting the outcomes of proactively settled complaints to help it meet its aims. The FOS will temporarily amend the way it reports business-specific complaints data that relates to the complaints ‘uphold rate’. It’s hoped this change will encourage firms to proactively settle complaints and help to reduce the FOS’s backlog of complaints. A cut-off date of 31 October 2021 was set for complaints to be in scope under this new proposal and the normal procedure for recording complaints will return from 1 April 2022 onwards.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.