The Financial Ombudsman Service has observed a substantial rise in complaints regarding motor finance in the most recent quarter. The latest data reveals that complaints related to vehicle finance have more than doubled, totalling 4,622 in the three-month period ending in September. This increase of 115% compared to the previous quarter is of significant concern.
Notably, vehicle-related issues made up a quarter of all cases received by the Financial Ombudsman Service during this financial year. The complaints were linked to hire purchase (motor) and conditional sale (motor) agreements, indicating a widespread issue affecting consumers across the board.
The complaints covered various aspects of vehicle ownership, from car finance agreements to insurance for roadside assistance, caravans, commercial vehicles, and motor warranties. For insurance claims related to vehicle damage or loss, disputes over valuation, customer service problems, and delays in claim settlements were among the common concerns reported by consumers.
Abby Thomas, Chief Executive and Chief Ombudsman of the Financial Ombudsman Service, expressed apprehension regarding the mounting complaints, particularly considering the financial strain and stress faced by many consumers. She stressed the importance of transparency and fairness in the treatment of customers by financial firms, especially given the significant costs and anxieties associated with vehicle ownership and finance deals.
Importantly, the data revealed that a large portion of car finance complaints were brought forth by professional representatives, accounting for over 90% of cases related to unaffordable or irresponsible lending, and 70% of complaints on fees, charges, and commission. Surprisingly, the uphold rate for these motor finance complaints brought by professional representatives was only 8%, significantly lower than the 42% uphold rate for cases brought directly by consumers.
In response to the influx of complaints from professional representatives, the Financial Ombudsman Service has initiated a consultation on imposing charges on claims management companies and other relevant professional representatives. The aim is to address speculative and poorly substantiated complaints while providing clarity and guidance for both consumers and representatives.
James Dipple-Johnstone, Deputy Chief Ombudsman at the Financial Ombudsman Service, highlighted the need for professional representatives to exercise diligence and discernment in advising their clients. He also underscored the accessibility and impartiality of the Ombudsman’s service, emphasizing that consumers do not necessarily require professional representation, as the service is offered free of charge and is designed to be user-friendly.
In conclusion, the increasing number of complaints related to motor finance highlights the challenges and complexities that consumers face in this area. The Financial Ombudsman Service’s efforts to address these grievances and regulate professional representation demonstrate a commitment to upholding fairness and accountability in the financial sector. As the consultation on potential charges progresses, it remains essential for financial firms and representatives to prioritize the well-being and rights of consumers, ensuring transparency and ethical conduct at every step.
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