The Current State of FOS Complaints – Q2, FY 2024 / 2025

The Financial Ombudsman Service has released their complaints data for Q2, covering July to September 2024.

Continued high demand in Q2

The key headline is the overall high level of demand for the service, mirroring what was experienced in Q1. If demand continues consistently for the second half of the financial year, this will represent a record high for the Service – the is despite 24 / 25 not being year dominated by a singular mass issue such as Covid-related complaints, PPI or mortgage endowments, which have driven previous highs in demand.

For 24/25, high volumes are observed across the spectrum, with pressure being put on the service for many products, including:

• Motor finance complaints relating to disclosure of commission (this is clearly driving higher volumes, but firms remain in preparation stage as the regulator is yet to confirm their approach following recent court decisions)
• Financial fraud, across many types of fraud complaints, which presents a perennial challenge for firms
• Affordability complaints across products, but particularly for credit cards
• Recent high volumes in insurance across motor, home and travel

This all speaks to the tough complaints environment for those in the financial services sector currently. Complaint volumes are being driven across new and established product types, putting pressure on complaints functions throughout. Some of these topical issues are unlikely to be concluded soon – with particular reference to motor finance complaints.

Addressing claims management companies (CMCs)

Another key focus for the Ombudsman is the role of CMCs and third-party representatives in driving complaint volumes. Of the quarterly high of 22,366 complaints for credit cards alone, over 85% were brought by CMCs. With the main points of contention regarding affordability and responsible lending.

CMCs remain active in other categories too, such as fraud and motor finance. The Ombudsman has reiterated that customers can bring these complaints without needing representation and subsequently receive the entirety of any redress due; without paying for CMC fees.

The FOS has confirmed it will be looking to implement fees for complaints brought by CMCs and professional representatives at £250 a case, which will drop to £75 if successful. The aim is to ensure more stringency around the legitimacy of cases being brought to their service.

Key takeaways for firms

1. Flexible resource planning
2. Ensuring you have a strong frontline team which identifies and resolves complaints at point of contact (or within three days) will help reduce duplication of tasks and escalate only complaints which require more detailed case work
3. Respond and adapt as demand continues to fluctuate and ensure you understand the levers your firm can pull to ensure temporary and long-term capacity; overproduction and overtime incentives linked to quality and customer outcome metrics; cross-skilling Agents and Complaint Handlers across channels and functions to maximise your ability to load balance; timelines for long-term recruitment and / or temporary resource
4. If appropriate, relationships with CMCs representing your customers can yield information about when complaints will be logged and what information will be needed to resolve them. You may have the opportunity to engage early with customers to get to the crux of a complaint more quickly. Building a balanced and practical relationship with CMCs – highlighting areas where submissions don’t meet the bar for a complaint, whilst working together practically to ensure a smooth complaints function – can be beneficial, too
5. With so much change, a number of key decisions to be made and concurrent consultation periods at FOS and the FCA, it's important to stay on top of current affairs and issues industry-wide
6. Complaint prevention
7. Is your messaging to customers around fraud and scams having a positive effect?
8. Are issues highlighted by root cause analysis addressed across the business, and not just used to improve your complaint function? Complaints offer unique insight into product and service issues and shortcomings in policy or guidance, as well as complaints performance
9. Is your messaging reaching your customers in the way you intended?
10. Using FOS decisions to inform your complaint handling strategy, including treatments for customers with known issues
11. Focus on first point of contact resolution for all complaints which do not require casework
12. Explore ways to empower your people at the frontline to identify, manage and decision complaints in the contact centre (though it’s appreciated that complaints which are able to be resolved in the contact centre are not those typically seen escalated to the FOS, this will help you place more focus on those complaints which do require more complex casework)

Look out for continued updates aligned to the release of quarterly, half-yearly and annual FOS complaints data.