Credit card complaints hit record high - 4 things you need to know

Credit card complaints made to the Financial Ombudsman Service (FOS) hit a record high in the last three months of 2023.

The majority were made as customers felt their credit limits were excessive, or their interest rate was too high, the ombudsman said. 

The FOS handles complaints about most financial services and was set up to provide a speedy and cheap way to resolve disputes between firms and customers without going to court. 

Here, we take a closer look at the figures and explain how to complain against your credit card provider.

1. Credit card complaints jump

There were 5,660 complaints to the FOS about credit cards between 1 October and 31 December 2023. 

This is the highest number for a three-month period and is a 75% increase from the same period in 2022, when there were 3,216 complaints. 

All categories saw a year-on-year increase with current accounts continuing to be the most complained-about product.

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2. Irresponsible lending most complained about

When looking at the credit card complaints, the most popular category was perceived unaffordable or irresponsible lending by financial firms.

This accounted for 54% of credit card complaints, with 3,216 lodged. 

In the same period in 2022, just 665 of the 3,216 complaints lodged were about irresponsible / unaffordable lending (20%). 

The FOS said while the use of credit cards has increased, consumer complaints show that not everyone is happy with the service they receive – in particular, people believe financial providers should have intervened over persistently high credit balances, high credit limits or provided lower interest rates.

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3. Individuals have a better success rate

The FOS said almost three quarters of the credit card and unaffordable lending complaints were brought by professional representatives such as claim management firms or lawyers. 

However, a far lower percentage of these were upheld compared with those who brought their their complaint directly to the FOS. 

Viv Kelly, ombudsman director for consumer credit at the FOS, said: ‘While professional representatives have an important role to play, we’re currently seeing some poorly evidenced complaints. In these instances, uphold rates can be considerably lower than if a consumer brings a complaint directly to our service.

‘Consumers don’t need to use a professional representative to bring a complaint to our service. People can come directly to our free, independent service, and we’ll see if we can help resolve their complaint.’

The FOS said that across a variety of financial products, of the 7,500 which were about perceived irresponsible and unaffordable lending, 70% were from professional representatives. 

Of the complaints that the FOS resolved over this period, just 14% brought by professional representatives were upheld compared with 44% from consumers who took their complaint directly to the FOS.

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4. A third of complaints upheld  

The FOS upheld 35% of cases between the three month period in favour of the consumer. This figure relates to all financial products, and not just credit cards and includes all complaints submitted by individuals and by professional representatives. 

When resolving a case, the FOS will ask the financial provider to put things right. 

It said in most cases this will involve putting the customer back in the position they would have been in if things hadn’t gone wrong. This may involve paying money or compensation for distress and inconvenience. 

The exact resolution will depend on the nature of your complaint, however as an example the FOS has said: 

If a loan was repaid - it may ask the lender to refund any interest and charges paid by the customer, add 8% in simple interest and remove any adverse information on your credit file.

Where there is an outstanding balance it may ask the lender to remove all interest and charges, and make sure the balance is only made up of what was lent, deduct any payments made and refund any difference if you paid too much, adding 8% in simple interest.

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How to make a credit card complaint

The FOS service is free and easy-to-use and you don’t need to pay anyone to represent you, such as a lawyer or claims management company. 

Complain to your provider first 

You must have reached a final response in your dispute with your bank or credit card provider before you can take your complaint to the Financial Ombudsman. 

This means you'll need to go through the internal complaints procedure of the provider you’re complaining about. 

If the provider still hasn’t resolved your complaint within eight weeks, they've rejected your complaint or you're unhappy with their final response, you can then take your complaint to the FOS. 

Use the FOS complaint checker

It will also give you an idea if it will be able to help you and explain the next steps. 

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Write the complaint 

You’ll need the following information to hand when you complete the FOS complaint form:

The name of the financial business you're complaining about.

Dates of correspondence with the business, including the date of its final response.

Your account or policy details.

If you’re unable to use an online form, there are other ways you can make a complaint. Call the FOS on 0800 023 4567 and it will take the details of your complaint over the phone or arrange to send a form or other information in different formats. 

The FOS said Mondays are usually the busiest days –so to call on a different day to avoid longer waiting times.

source https://www.which.co.uk/news/article/credit-card-complaints-hit-record-high-4-things-you-need-to-know-a7dKj8l5kg0D