How to complain about your financial services provider

Financial regulators are consulting on changes to how complaints are handled, particularly when major issues are uncovered.

It comes after chancellor Rachel Reeves used her Mansion House speech to call for greater co-operation between bodies such as the Financial Conduct Authority (FCA) and Financial Ombudsman Service (FOS) to support consumers more effectively.

A call for evidence from the FCA and FOS is seeking views on changes to the redress scheme.

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Proposals include whether the six-year time limit on referring a complaint to the FOS should be amended and if the redress scheme should dismiss collective groups of complaints by referring them to the FCA for regulatory action instead.

Another proposal is to restrict requests for a final decision from an ombudsman to if there is new evidence or a factual accuracy in an investigator’s assessment.

The FOS also said it plans to introduce a £250 charge for professional representatives such as claims management companies to bring complaints.

It would be reduced to £75 if the complaint ruled in favour of the consumer.

Consumers can still file their own complaint for free.

The call for evidence closes at the end of January 2025.

The FOS said earlier this year that there has been a "concerning" rise in complaints made about financial services.

A four-fold year-on-year rise in the number of complaints about credit cards and motor finance led the body to urge providers to be "open and transparent" with customers. In all, it received almost 75,000 complaints over the three months from 1 April to 30 June - a 70% rise compared to the same period last year.

It comes after the service said it expected to see a surge in complaints over the 2024/25 tax year. Disputes about banking services hit a 10-year high in the previous year.

So, which issues saw the highest number of complaints - and how can you complain about the service you've received? Here's everything you need to know.

Surge in complaints as cost of living crisis continues

According to the FOS, the number of complaints about financial products and services surged in the first quarter of the new tax year. The number of cases the service dealt with jumped 30,000 (70%) year-on-year.

The most complained about issue was credit cards. The number of disputes the FOS recorded surged 333% (14,000) to 18,175, with most of these reports concerning perceived irresponsible and unaffordable lending.

Motor finance saw a similar increase, with the number of complaints soaring from 3,678 in Q1 2023/24 to 15,925 in the same period of 2024/25. Issues with motor finance commission made up three-quarters of these cases.

In what the FOS said appeared to be a new trend, most of the complaints concerning these two areas were brought by professional representatives. Overall, the percentage of cases raised by these middlemen has risen from 17% to more than 50%.

The Ombudsman said that consumers did not need to turn to third-party firms to raise issues with the service they have received, and that the evidence suggested they were no more successful than individuals in getting their complaints upheld. It found that 25% of cases brought by professional representatives were upheld compared to 40% of those raised by consumers themselves.

Abby Thomas, chief executive and chief ombudsman at the FOS, said: "Whilst professional representatives have an important role to play, they must ensure that their cases are well evidenced and have merit. If consumers have a dispute with their bank or finance provider they can come directly to our easy-to-use service for free and we will see if we can help”.

Elsewhere, there were smaller increases in complaints about current accounts and car insurance. The number of cases involving current accounts rose by a fifth annually to 8,698, while insurance disputes only went up 2%. This came despite a significant leap in the cost of annual premiums.

Reflecting on the increases to caseloads, Thomas added: “It’s concerning that we’re continuing to see large volumes of complaints, particularly considering the cost of living crisis. It’s vital that businesses are open and transparent with their customers, treating them with fairness and understanding."

How to complain about financial providers

The FOS should be the last resort if you have a complaint about a regulated financial product or service.

The first step is to complain to your provider in writing either by email or letter to their complaints department. You can only complain about regulated products provided by firms approved by the Financial Conduct Authority (FCA). That includes residential mortgages, insurance products, pensions and investments, although you can’t complain about stock market performance.

“Tell them what happened and when, and ask them to put things right,” says the FCA. Providers need to give a response within eight weeks on if your complaint is successful, how it will be resolved or why they need more time to investigate.

If you are unhappy with the decision or have not had a response after eight weeks, you can then complain to FOS. Complaint forms can be downloaded from the FOS website.

It will consider your issues and contact the financial firm to get their side before making a decision whether to uphold the complaint and award compensation. The latest FOS data shows it upheld 37% of complaints in the first quarter of the 2024/25 financial year.

There are no costs to complain to your financial provider or to the FOS. And you don't need to enlist the services of a professional representative to complain. Claims management companies can also help with complaints on a no-win-no-fee basis but could take a large chunk of any compensation you receive.

Another option if you are unhappy with complaining to your financial provider or the FOS is to take legal action. But this will cost you as you may need to pay for legal advice and cover court fees.