Dramatic rise in fraud and scam complaints

People are being warned to be extra vigilant about the threat from fraudsters and scammers following a significant rise in cases seen by the Financial Ombudsman Service over the last year.

The number of customers asking the Financial Ombudsman Service for help with fraud and scams complaints increased by 66% in the first quarter of the 2021/22 financial year, going up to 5,025 cases compared with 3,028 in the same period during the previous year.

Over that period, 60% of fraud and scam complaints were upheld by the organisation, compared with 50% the previous year. That suggests that banks and other financial institutions still need to do more to resolve complaints from their customers fairly before people are forced to seek help from the Financial Ombudsman Service.

The data, published today (Friday 24 September), shows that fraud and scam complaints continue to be one of the main drivers of complaints to the Financial Ombudsman Service. Cases include: problems caused by fraudsters posing as a customer’s bank and convincing them to move their money to a fake ‘safe account’; consumers being scammed by paying for goods via a bank transfer but not subsequently receiving what they paid for.

Commenting on the new figures, Financial Ombudsman Service interim Chief Executive and Chief Ombudsman Nausicaa Delfas said:

It’s a real concern that we are seeing such an increase in scams. It’s vital that people take extra care with their finances, as unfortunately fraudsters are becoming increasingly sophisticated.  If people feel they have not been treated fairly by their banks, we are here to help. 

The Ombudsman Service also saw an increase in complaints about cryptocurrencies during the pandemic. While cryptocurrencies are unregulated investments, the Ombudsman Service can look into complaints about the banking providers who refuse to reimburse consumers who feel they’ve been a victim of a cryptocurrency fraud or scam. Anecdotal evidence suggests the increase in complaints about cryptocurrency complaints could be in part driven by social media-based scams, with young people wanting to make extra cash while furloughed, while others were simply spending more time on social media.

Overall, the Ombudsman Service received 50,906 complaints about financial businesses in the first three months of the financial year.

For the first time in over a decade, current accounts were the most complained about product, with consumers bringing 6,911 complaints to the service. This is an increase of 55% when compared to the same period last year, when the ombudsman service received 4,466 complaints about current accounts. Fraud and scams accounted for around half of the current account complaints that the service received in the first three months of this financial year.

Credit cards (4,039 complaints received in April-June 2021) and car/motorcycle insurance (2,427 complaints received in April-June 2021) were the other products where the service saw the highest number of complaints.

The Financial Ombudsman Service has today published:

• Quarterly data in relation to financial products – this covers the period April -June 2021; and
• Individual companies’ data – this covers the period January – June 2021.

About the Financial Ombudsman Service

The Financial Ombudsman Service was set up by Parliament to resolve individual complaints between financial businesses and their customers on a fair and reasonable basis, as an alternative to the courts. It can look into problems involving most types of money matters from payday loans to pensions, pet insurance to PPI. It is committed to sharing insight and experience to encourage fairness and confidence in financial services.