Financial Ombudsman Service: cost of living crisis set to drive more complaints

The Financial Ombudsman Service has predicted an uptick in complaints over the next 12 months due to 'everyday financial concerns'.

A woman calls the Financial Ombudsman Service about her bills
The Financial Ombudsman Service is expecting an uptick in cost of living-related complaints
(Image credit: Getty Images)

The Financial Ombudsman Service (FOS) has suggested it expects to see cost of living pressures drive another surge in consumer complaints over the next year.

In a sign the crisis is far from over, the official financial consumer complaints handler has predicted it will receive 210,000 new cases in the 2024/25 financial year - a 6% rise on the number it expects to see in 2023/24 and 27% more than it recorded in 2022/23. It has upped the number from the initial assessment it made in December 2023.

Exact data for the current year will not be available until June. But the latest quarterly statistics showed new complaints were 16% higher between October and December compared to a year previously, with 47,868 being lodged with FOS. More than a third of these (35%) were upheld. The quarter saw the “highest level ever” of complaints about credit cards.

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The public body added that it expects “everyday financial concerns” will dominate the complaints it handles over the next 12 months. It said unaffordable lending, credit card complaints, as well as fraud and scams, likely to be the main issues raised with it.

It comes despite signs the cost of living crisis is easing somewhat. Inflation fell to 3.4% in February - a rate that is now being outpaced by wage growth. However, the Bank of England has remained cautious, keeping interest rates at a 16-year high. The situation means homeowners are still being squeezed by high mortgage rates, at the same time as renters are also facing record rents.

Financial Ombudsman Service pledges to improve case resolution rate

The FOS has set out its goals for the next 12 months in its final budget for the 2024/25 financial year. They suggest it expects cost of living pressures to continue to hit consumers for the foreseeable future.

With the highest number of complaints in four years anticipated over the coming year, the FOS has pledged to increase its dispute resolution capacity by 17% year-on-year from 192,500 to 225,000 cases. The majority of cases (149,200) it expects to receive will be to do with banking and credit complaints - for example, unaffordable credit cards or loans.

Insurance complaints make up the next largest tranche of anticipated cases (47,400) with motor insurance likely to lead the way. The remainder (12,800) are anticipated to cover complaints about investments and pensions.

The service also wants to resolve 90% of cases within six months. It said it cut the average time it takes to complete cases from 4.8 months in 2022/23 to 2.96 months by the final quarter of 2023.

At the same time, it will slash fees and levies it takes from the financial industry by £60m over the course of the year, once inflation and the increased caseload is taken into account. This includes a 13% (£100) cut to case fees to £650. The FSO is free for consumers.

Abby Thomas, chief executive and chief ombudsman of the FOS, says: “With uncertainty around casework levels in the year ahead, we’re building a service which is flexible and agile, allowing us to respond to increased demand across any area of our business. 

“Our plans will help ensure that the customer is at the heart of everything we do. We want every person who engages with our service to clearly understand the outcome of their case. Now more than ever it’s crucial that businesses work with us to improve all customers’ experiences of financial services.”

How to complain to the Financial Ombudsman

The FOS is where you go if your bank or financial services provider doesn’t adequately resolve your complaint.

To use the service, you must first complain directly to your provider in writing, for example by email or letter. They must come back to you within eight weeks, explaining how they will resolve your problem or why it may take longer to investigate the issue you’ve raised.

At this point, if you’re unhappy with their response, you can escalate it to the FOS for free by filling out the complaints form on its website. You can only complain to the Ombudsman about regulated products provided by firms that have been approved by the Financial Conduct Authority (FCA).

It will then consider your problem before launching an investigation, contacting the firm you’ve complained about to hear their side of the story. If the FOS upholds your complaint, you may be due compensation.

Beyond the FOS, another option is to take legal action. But this can see you incur large fees to cover your legal advice and court fees, especially if you lose your case. 

Claims management companies can also help to deal with complaints on a no-win-no-fee basis, but they may take a significant proportion of any compensation you receive.

Henry Sandercock

Henry Sandercock has spent more than eight years as a journalist covering a wide variety of beats. Having studied for an MA in journalism at the University of Kent, he started his career in the garden of England as a reporter for local TV channel KMTV. 

Henry then worked at the BBC for three years as a radio producer - mostly on BBC Radio 2 with Jeremy Vine, but also on major BBC Radio 4 programmes like The World at One, PM and Broadcasting House. Switching to print media, he covered fresh foods for respected magazine The Grocer for two years. 

After moving to - a national news site run by the publisher of The Scotsman and Yorkshire Post - Henry began reporting on the cost of living crisis, becoming the title’s money editor in early 2023. He covered everything from the energy crisis to scams, and inflation. You will now find him writing for MoneyWeek. Away from work, Henry lives in Edinburgh with his partner and their whippet Whisper.