9:15 am, December 14, 2023
Complaints about financing vehicles have reached a five-year high, according to new data released today.
The Financial Ombudsman Service also said that vehicle-related complaints comprised a quarter of all cases it received during the second quarter of this financial year – July 1 to September 30.
The rising complaint levels were in two separate sectors for vehicles.
On the consumer credit side, the dispute resolution body received 4,622 complaints about hire purchases and 1,569 complaints about conditional sales, which are similar to hire purchase.
Meanwhile, there were 4,036 complaints about car/motorcycle insurance, making it the highest complaint levels the ombudsman has received for all three individual products in more than five years, the service said.
And although car finance agreements and traditional car/motorcycle insurance made up the vast majority of the claims, there were also some smaller categories of vehicle-related complaints, including motor warranties, insurance for roadside assistance, plus caravans and commercial vehicles.
Overall, the ombudsman received 76,827 inquiries and 46,716 new complaints about financial products and services during the second quarter.
That was an increase on the number of complaints received in the same quarter last year – up from 38,470 new complaints.
Complaints relating to motor vehicles made up 25% of all cases this quarter – up by seven percentage points from 18% in the same period last year.
The top five complained-about products and services, with last year’s Q2 figures in brackets, were:
- Current accounts – 7,880 (5,945)
- Hire purchase (motor) – 4,622 (2,149)
- Credit cards – 4,505 (3,386)
- Car/motorcycle insurance – 4,036 (2,729)
- Conditional sale (motor) – 1,569 (384)
Abby Thomas, chief executive and chief ombudsman of the Financial Ombudsman Service, said: ‘Many people depend on their cars so it’s concerning to see such a significant rise in vehicle-related complaints.
‘Buying a vehicle can be costly and stressful, and we’re now also increasingly hearing from people worried about whether they can pay their finance deals.
‘What’s clear is that whatever the perceived issue, firms need to ensure they are treating customers with transparency and fairness.’
The complaints data also showed that many car finance agreement claims were being submitted by professional representatives.
Altogether, they accounted for more than 90% of cases related to unaffordable or irresponsible lending, and 70% of complaints about fees, charges and commission.
The uphold rate for these motor finance complaints brought by professional representatives was just 8%, versus a 42% uphold rate when cases in the same category were brought directly by consumers.
James Dipple-Johnstone, deputy chief ombudsman, said: ‘While professional representatives can play an important role in resolving financial disputes, we’re seeing too many speculative and poorly evidenced complaints.
‘The vast majority of motor finance complaints are now brought by professional representatives.
‘We’re seeing a mix of both good and bad practice, but with an uphold rate of just 8%, it’s clear some representatives could do more to learn from our established approach about which cases are likely to have merit and advise their clients accordingly.
‘It’s important to remind consumers also that they do not need to use a professional representative as our service is free, independent and easy to use.’
