Motor finance complaints to financial ombudsman double

Complaints about motor finance more than doubled in the three months to September.

New figures from the Financial Ombudsman Service reveal complains surged 115% to 4,622 in the period.

Vehicle-related complaints were responsible for a quarter of all the cases received by the Financial Ombudsman Service in the second quarter of this financial year.

These increasing complaint levels have arisen in two separate sectors. From 1st July to 30th September 2023, on the consumer credit side, the Financial Ombudsman received 4,622 complaints about hire purchase (motor) and 1,569 complaints about conditional sale (motor).

Whilst car finance agreements and traditional car/motorcycle insurance made up the vast majority of these claims, there are also some smaller categories of vehicle-related complaints including those about insurance for roadside assistance, caravans and commercial vehicles, as well as motor warranties.

When issues occur with people’s cars or motorcycles, and they need to claim on their  insurance, complaints arise due to numerous issues including disputes over vehicle valuation, customer service issues, and delays in claim settlements.

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 shows that many car finance agreement claims are being submitted by professional representatives.

Altogether they account 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 particularly low at just 8%, compared to a 42% uphold rate when cases in the same category were brought directly by consumers.

This rate is also much lower than the 35% uphold rate for general complaints brought by professional representatives across all categories during the same time period.

Last week the Financial Ombudsman Service launched a consultation on new powers to charge claims management companies and other relevant professional representatives.

The Ombudsman is inviting views on the impact of potential charges and how a regime might be implemented, including on the fee; the impact on complaint volumes, the potential impact on different groups of complainants, and the lead time required for businesses to be ready.

James Dipple-Johnstone, Deputy Chief Ombudsman at the Financial 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 eight percent, 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.”