Vehicle-related complaints now make up a quarter of cases being handled by the Financial Ombudsman Service (FOS) – and have risen by 75 per cent in a year.
The surge in car and van complaints to the watchdog is primarily driven by insurance and vehicle finance gripes.
But most car finance deals are now being brought by claims management companies (CMCs) – many of whom seem to be drumming up shoddy cases or else failing to represent consumers properly.
The FOS said a spike in insurance cases is being caused by valuation disputes, customer service issues, and delays in payouts in the second quarter of this year.
It logged 4,036 complaints about car and motorbike cover in Q2, its highest level in more than five years.
Not good, on reflection: Many consumers would be better off handling their car finance complaint to the FOS themselves, as cases brought through claims firms are more likely to fail
On the vehicle finance side, the Ombudsman received 4,622 complaints about hire purchase and 1,569 complaints about conditional sale agreements.
The FOS had 11,869 vehicle-related complaints in total in Q2 of this year, up 75 per cent from 6,744 in the same period the year before.
The FOS also logged fewer car and van complaints for caravans, breakdown cover and motor warranties.
FOS chief executive Abby Thomas 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.’
Consumers warned about using claims firms
Notably, the FOS highlighted a trend of car finance complaints increasingly being filed by claims CMCs, rather than directly by customers.
Cases handled by CMCs made up 90 per cent of complaints about unaffordable or irresponsible lending, and 70 per cent of complaints about fees, charges and commission.
But just 8 per cent of these cases brought by CMCs were won, compared to 42 per cent of those started by customers.
FOS deputy chief ombudsman James Dipple-Johnstone said: ‘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 per cent, 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.’
Current accounts top tables for complaints
Current accounts and credit cards also made the top five most-complained about products, with both seeing increases year-on-year.
And current accounts continue to be the most complained-about product overall, increasing by a third when compared to Q2 2022/23.
Credit cards are the third most complained-about financial deal, with 4,505 complaints this quarter compared to 3,386 cases in the second quarter of 2022/23.
On average, across all financial products, the FOS upheld 37 per cent of the complaints it resolved, compared to 34 per cent in the second quarter of 2022/23.
