FOS complaints tumbled ahead of motor finance ruling
Complaints to the Financial Ombudsman Service (FOS) fell to their lowest in more than a year ahead of the motor finance ruling.
The FOS received 68,000 new cases in April to June, down from 74,600 complaints in the same period of 2024.
Motor finance complaints remained the highest grievance but dropped to 21,500 cases from 36,000.
This came ahead of the Supreme Court’s landmark ruling on the car mis-selling scandal, which provided lenders a lukewarm win with only one of three claimants entitled to compensation.
Elsewhere, complaints regarding frauds and scams fell to 6,800 from 8,800.
The fresh figures follow a fleet of reforms to the ombudsman as the body tightened restrictions on complaints from professional representatives.
Under the new system, which came into effect in April 2025, banks are not charged for the first three complaints they receive in the financial year. From the fourth complaint forward, a case fee of £650 is applied. If a complaint is dismissed, withdrawn, or abandoned, or if it is found to be outside the FOS’s jurisdiction, the fee is reduced to £475.
Professional representatives are charged £250 for each case referred beyond the first ten of the year. Should a complaint be upheld in favour of the consumer, the fee is reduced to £75.
Supreme Court strikes down claim firms
Claims firms were the subject of a dressing down by Lord Justice Reed, President of the Supreme Court, for their aggressive advertising campaigns.
Reed blasted the firms for signing up a “great many people have done so under the impression that they had a valid claim” ahead of the top Court’s verdict.
The chairman of specialist lender S&U praised the Court, telling CityAM: “They’ve finally sussed out these ghastly CMCs”.
“It’s just disgraceful how they’ve been doing it in a very, very, very misleading way”.
Banks across the UK have vocally expressed their frustrations with claims firms that have triggered a rapid surge in fees to the ombudsman.
Vanquis Banking Group suffered a surge in complaints triggered by claims firms in 2024, leading to their FOS fees spiking 66 per cent to £24.8m for the period. The bank has pursued litigation against the firms citing they were “responsible for the highest volume of unmerited complaints in recent years”.
Vanquis swung back into profitability on Thursday as the bank slashed costs with chief executive Ian McLaughlin declaring their “recovery was on track”.
CityAM revealed in July the banking industry’s ‘Big Six’ – Barclays, HSBC, Lloyds Banking Group, Natwest, Santander and Nationwide – paid a combined £38.8m in FOS admin fees for the year ending 31 March.