Official complaints about banks’ handling of fraud have hit a quarterly record high as the sector comes under stricter rules to reimburse scam victims.
The Financial Ombudsman Service (FOS), which resolves disputes between consumers and financial firms, reported 9,091 cases about fraud and scams between July and September.
That number is up from 6,264 during the same period last year and includes 4,956 cases tied to authorised push payment (APP) scams, where consumers inadvertently send money to a fraudster posing as a genuine payee.
The sharp rise in complaints comes as regulators enforce far stronger protections for scam victims, which lost £571.1m to criminals in the first half of 2024.
A mandatory reimbursement scheme from the UK payments regulator came into force on 7 October, making banks and other payment firms liable for refunding APP fraud victims up to a limit of £85,000 per claim.
The cap was lowered from £415,000 at the last minute after intense lobbying from industry groups and pressure from ministers over concerns it could put smaller firms out of business and encourage new types of scams.
The FOS said the higher complaints were partly due to the increasing complexity of cases, including multi-stage frauds – where funds pass through several banks before reaching the fraudster.
It also cited growing numbers of complaints about customers’ accounts with e-money firms, which are more lightly regulated than fully licensed banks and commonly used to transfer cryptocurrency.
Of the 2,196 total e-money cases received over the three months, around three-quarters related to fraud and scams. The FOS found that in some cases fraudsters actively encouraged victims to open e-money accounts.
“It’s concerning to see yet another rise in fraud and scams cases coming to our service,” said Abby Thomas, the FOS’ chief executive.
“People can feel embarrassed to have fallen victim to a fraud or scam and may be reluctant to report the issue, but these crimes can be complex and incredibly convincing and nobody should be afraid to come forward.”
Overall, the FOS received 73,692 complaints during the three months, up almost 58 per cent from 46,716 cases a year earlier.
Complaints about current accounts and credit cards are also at record highs, with cases involving the latter product booming almost fivefold to 22,366 during the three months.
The FOS said the “vast majority” of credit card cases involved allegations of “irresponsible and unaffordable lending”, including customers complaining that financial providers should have intervened over high credit balances or offered lower interest rates.
Rocio Concha, director of policy and advocacy at consumer group Which?, said the FOS’ numbers were “of huge concern”.
“The rise in complaints about fraud is particularly concerning and some suggest that some banks and payment providers are not treating customers fairly,” she added.
“Consumers that invest in cryptocurrencies should know they are putting money in unregulated schemes and could lose all their money should something go wrong.”
Around a third of current account complaints and 85 per cent of credit card cases are brought by professional representatives, including claims management firms, the FOS said.
These companies have come under fire in recent years for submitting mass claims without determining whether they have merit and failing to respond to requests for evidence.
In plans backed by the new government, the FOS is set to charge a £250 fee for claims managers to lodge a case, reduced to £75 if the outcome favours the consumer.
A spokesperson for banking trade body UK Finance commented: “Financial services invests more in countering fraud than any other sector and is the only sector that reimburses victims – most fraud losses are reimbursed, despite the fact the majority of fraud starts online or via telecommunications.”
“Credit card companies must comply with strict regulatory rules to assess whether lending is affordable,” they continued. “They provide a wide range of support to anyone concerned about their finances or repayments.”