What is causing the number of financial services complaints to decrease?

Market watchers are pointing to the positive effects of the Consumer Duty filtering through in the latest FCA complaints data, which shows an overall decrease of 4.3% in financial services complaints.

Complaints reduced across all product areas, including the most frequently complained about areas of current accounts, motor and transport, and credit cards, with an overall total of 1.78m grievances in the second half of 2024.

Darren Richards, head of insurance, regulatory & risk at independent financial services consultancy Broadstone, says: “Given the immense scrutiny from the FCA on consumer outcomes and fair treatment, the regulator will be pleased to see the number of complaints falling across all major product groups.

“While the drop is a small one for now, it nonetheless marks a step in the right direction and suggests that initiatives like Consumer Duty are starting to pay dividends.”  

With markets remaining volatile and consumer confidence shaky, financial services firms need to retain a laser focus on ensuring they are looking after the long-term financial interests of their customers throughout their interactions, Richards says.

“Redress remains a costly outgoing for firms – as the ongoing motor finance case should be a reminder of – so it quite literally pays to treat customers fairly.”

The percentage of complaints that were upheld by firms remained around 57% between 2024 H1 and 2024 H2 while in 2024 H2 the total amount of redress was £236m. This is a 3% decrease on the 2024 H1 figure of £243m.

Where did complaint numbers fall?

All product groups saw a decrease in their complaint numbers:

• Banking and credit cards decreased 1.3% from 850,983 (2024 H1) to 839,526 (2024 H2)

• Decumulation & pensions decreased 4.2% from 93,045 (2024 H1) to 89,172 (2024 H2)

• Home finance decreased 10.0% from 93,234 (2024 H1) to 83,936 (2024 H2)

• Insurance & pure protection decreased 6.0% from 764,272 (2024 H1) to 718,496 (2024 H2)

• Investments decreased 15.7% from 62,825 (2024 H1) to 52,971 (2024 H2)

Complaints decreased in the three most frequently complained about products:

• Current accounts from 492,558 in 2024 H1 to 491,172 in 2024 H2 (0.3%)

• Motor and transport from 276,795 in 2024 H1 to 254,788 in 2024 H2 (8.0%)

• Credit cards from 222,529 in 2024 H1 to 217,160 in 2024 H2 (2.4%)

Hugh Fairclough, partner and head of financial services at RSM UK, says the decreasing complaints seen across all financial services products “suggests that measures to improve outcomes for customers introduced by Consumer Duty are having a positive impact”.  

“Many firms have improved their customer service practices in response, which may now be coming through in today’s H2 2024 complaints data.”

The resolution of long-standing issues, such as Payment Protection Insurance complaints, has likely also contributed to the overall decrease, he adds – along with improved communication with customers, “as clearer customer information means fewer misunderstandings which can lead to complaints”.

In insurance, the 6% reduction in complaints may be partly due to insurers getting better at catching issues before they escalate into an official customer complaint.

There is also a 4.2% reduction in decumulation and pensions complaints, perhaps indicative of a slow-down in pensions defined benefit transfer advice complaints, as most of the market has effectively stopped this service, and professional indemnity insurers have pulled away from it.

“It will be interesting to see whether the declining complaints trend continues into the next data set though, as with the Supreme Court ruling on motor lender’s discretionary commission payments, we may see complaints increasing again in H1 2025,” Fairclough says.

‍