British financial complaints in Q4 surge by 42.5%, with car loan disputes resulting in a 30 billion compensation storm.

According to data from the Financial Ombudsman Service (FOS) in the UK, complaints from financial services customers in the last three months of 2024 have risen by over 40%, leading to more car finance cases being left in legal uncertainty. FOS stated in a statement on Tuesday that in the three months leading up to December, new complaints surged from around 48,000 in the same period of 2023 to over 68,400. Car finance was the category with the largest number of complaints, followed by credit cards. Interim Chief Ombudsman James Dipple-Johnstone said, "Ongoing legal actions have affected our ability to make final judgments on these cases." He stated that once the legal situation becomes clearer, the institution is taking steps to resolve complaints as soon as possible. The UK Supreme Court is currently reviewing several cases regarding the mis-selling of car finance products, with a ruling expected later this year. Analysts from Moody's stated that the improper selling of car loans may ultimately cost the financial industry 30 billion. However, the outcome remains uncertain, as judges of the UK Supreme Court need to weigh multiple factors, while the government also expresses concerns about the impact of a large compensation bill on the wider economy. FOS, set up by the government to help resolve disputes between consumers and financial services companies, is currently facing its biggest turmoil since the payment protection insurance (PPI) scandal over a decade ago. Its former Chief Ombudsman Abby Thomas suddenly resigned in February, and its chair Zahida Manzoor will also be stepping down this summer. Nearly half of the cases handled by FOS come from claims management companies and other professional representative organizations. The day after Thomas' resignation, FOS announced that as of April, they would charge a referral fee of 250 per case to professional organizations. UK Chancellor Rachel Reeves stated that she hopes to reform FOS. In November last year, Reeves said that the Treasury is working closely with the institution and the Financial Conduct Authority to set clearer expectations for their cooperation in large-scale compensation events.