Car finance claims drive 49% increase in FOS complaints

The Financial Ombudsman Service (FOS) reported a 49% hike in complaints in the second half of 2024, citing a marked rise in motor finance commission cases and disputes about credit affordability, which were fuelled by a doubling in the proportion of claims brought by claims management companies (CMCs), as well as concerns around banking fraud. 

The newly released figures reveal continued high volumes of complaints with a total of 141,846 complaints received between July and December last year, compared to 95,349 complaints in the same period in 2023.

The headline figures show 109,155 new banking and credit complaints over the final six months of the year, compared to 62,139 in July to December 2023.

While the FOS does not provide a breakdown specifically looking at car finance claims, it does show how many cases were brought against each of the 233 businesses named.

This data indicates that Black Horse received 5,566 new claims; VW Financial Services 2,320; Stellantis Financial Services 1,913; Close Brothers 1,755; BMW Financial Services 1,671; Toyota Financial Services 827; and Mercedes-Benz Financial Services 837, with the vast majority of these likely to relate to car finance.

FOS analysis shows around 46% of complaints within this period (July – December 2024) were referred to the service by professional representatives. This compares with  22% during the same period in 2023, with FOS reporting the growth has mainly been focussed on credit affordability and car finance complaints.  

In the last six months of 2024, FOS upheld 33% of complaints in the consumers’ favour, compared to 36% in the second half of 2023. However, only around 25% of complaints brought by professional representatives were found in favour of the consumer, compared to around 37% brought directly by consumers for free.

Last month FOS introduced a new fee model to charge professional representatives who bring more than ten complaints a year, saying the move aims to provide a fairer fee arrangement and encourage these representatives to submit better-evidenced complaints, considering their merits more diligently before referring them. 

“That’s why we’re committed to strengthening the dispute resolution system – so it works better for everyone and reflects the needs of today’s financial landscape.” 

FOS is currently in discussions with the Treasury and the Financial Conduct Authority (FCA) to modernise the dispute resolution system to ensure it acts as a quick and informal resolution service as an alternative to the courts. 

Redress

Rising volumes of complaints in the auto finance sector are putting pressure on lenders’ operational systems, and with the Supreme Court ruling on commission disclosure expected in mid-summer, many are now also anticipating the need to establish a redress scheme.

Asset Finance Connect (AFC) and Shoosmiths recently ran a workshop – Commissions & Redress: What Auto Lenders Must Do Now to Stay Ahead – bringing together legal, regulatory, and market experts to equip auto lenders with the knowledge and strategy needed to respond to an as yet uncertain outcome.  See this article for tips on preparations.

“Our workshop participants raised a host of questions, and we have scheduled sessions at our summer conference dedicated to exploring what lenders need to do now to prepare.  This is a complex task, and by bringing together legal experts, industry specialists and a wide range of participants in the auto finance ecosystem, we plan to provide clarity and guidance on this critical topic.”

Find out more about AFC’s UK Summer Conference on June 3rd at the conference website.