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Economic challenges blamed for soaring number of complaints brought against financial businesses in first half of 2023

In the first six months of 2023, the Financial Ombudsman Service (FOS) received 93,114 complaints, representing an increase of more than 13,000 complaints on the preceding six months.

While fraud and scam cases contributed to around half of this 16.5% increase, the headline figures for financial advice firms to note are shown in the table below.

Source: Financial Ombudsman Service

Considering the relatively short six-month time span, the difference for almost every area is marked. It’s also something worth keeping a close eye on, as an increasing trend will inevitably effect a growing number of regulated firms in the weeks, months, and years to come.

In fact, 245 businesses featured in the first half-yearly report of 2023, a small but not insignificant increase from just 220 affected businesses in the previous six months – an 11% increase in just six months.

Economic challenges are likely to continue to take their toll

In their report, the FOS point out the economic challenges that we are all facing. With the ongoing cost of living crisis causing many to feel financial pressure, the effect of inflation on pension funds (especially those with a high proportion of liquid assets) is being more keenly felt by retirees in drawdown.

As a result, it’s highly likely that we’ll see yet another jump in complaints relating to decumulation and pension funds when the next report is published.

This is also an area that the FCA are focusing on. Commencing their review of retirement income advice early in 2023, they have stated their intention to publish their findings in Q4 2023. So, we should expect this imminently.

DB pension transfers remain in the spotlight

The data reveals that the majority of complaints relating to advisers were directly linked to defined benefit (DB) pension transfers.

Indeed, in June 2023, Professional Adviser reported that the FOS had resolved 399 complaints about advisers and their DB transfer work in 2022/23. 58% of these were upheld.

Read more: How we defended a pension transfer complaint to help keep a business sale on track

The same report revealed that the second most-complained about area is personal pensions. Between April 2022 and March 2023, the FOS state that they helped to resolve 337 complaints – 43% of which were upheld.

Defending complaints on the front line

Experts at handling claims, we help many clients settle complaints early, preventing them from ever reaching the FOS.

Over the last six months, we have witnessed an uptick in complaints relating to historic complaints which by their very nature come out of the blue, or more accurately, the distant past. One complaint from 1994 was particularly worrying to the firm concerned. While we are experienced in dealing with aged complaints and the FOS is well versed in dealing with complaints brought out of time, they still present a threat for firms. A correlation between the current economic environment can be easily drawn.

With the FOS increasingly upholding complaints in the consumer’s favour – up from 34% in the second half of 2022 to 37% in the first six months of 2023 – if you receive a complaint, it may be wise to speak to an expert for advice on how to best handle the situation to reach a fair outcome.

Get in touch

Jencap Partners ensure a pragmatic approach to dispute resolution. From evaluation of the complaint to the “final response”, and beyond, we take care of every aspect of the process and, subject to your PI insurance policy, your legal defence costs may be covered.

Find out more about how we could help you resolve a complaint by talking with one of our experts.

We’d be delighted to answer your questions. Please email mail@jencap.partners, book a short call by completing our online form, or call 029 2000 2325.