In recent years, the Financial Ombudsman Service (FOS) has reported significant increases in the number of complaints being made about consumer credit. However, a comparison of the data for the two most recent quarters tells a slightly different story. Comparing data from the third quarter of the current financial year (October to December 2019) with the second quarter (July to September 2019), we can see that there are only small increases in the numbers of complaints being made about certain areas of the credit market, indeed complaints have fallen in some areas.

However, complaints about payday loans, instalment loans and guarantor loans continue to rise significantly.

Enquiries to FOS about guarantor loans are up 36% from the second quarter total of 392 to 535. When we look at how many of these enquiries resulted in a formal complaint, guarantor loan cases are up 76% from 172 to 303.

Instalment loan enquiries are up 24% from 4,042 to 5,022, and instalment loan complaints have risen by a massive 174% from 1,653 to 4,535.

Payday loan enquiries have fallen slightly but the number of new cases into which FOS has commenced a formal investigation rose by 56%.

When we look at the outcomes of the FOS investigations, these three areas have some of the highest uphold rates. The uphold rate on guarantor loan complaints fell from 95% in Q2 to 90% in Q3, however, this remains the highest uphold rate for any product.

The uphold rate for instalment loans rose from 72% in Q2 to 75% in Q3. Instalment loans had the fourth highest uphold rate in Q2 and the third highest in Q3.

Instalment loans have a similar uphold rate as payday loans, for which the figure was 74% in Q2 and 73% in Q3.

Point-of-sale loans are the fourth category in which FOS reports an uphold rate of more than 70% in both quarterly periods. 86% of home credit complaints were upheld in Q3, with the equivalent figure for Q2 being 61%.

Outside of consumer credit, no product area had an uphold rate above 50%.

Payment protection insurance (PPI) complaints are also significantly higher, but this is perhaps not surprising given that August 29 was the last day on which complaints could be made to firms about this product. You would then expect that many of these complaints would then be sent to FOS in Q3 (October to December 2019). Not only does PPI remain the most complained about product, but it very nearly accounted for 50% of new complaints in Q3. Third quarter complaints about this type of insurance totalled 41,510 complaints, or 49.6% of the Q3 total, and a 72% increase on the 24,073 figure for Q2.

PPI cases once had a very high uphold rate at FOS, but the uphold rate is now much lower – it was just 16% in Q2 and 17% in Q3.

Between October and December, FOS received 407 new complaints about claims management companies (CMCs). More than three-quarters (306) of these related to PPI claims, 69 to accident claims and 32 to all other areas. The uphold rate for CMC complaints in the third quarter was 44%. FOS reports that claims management complaints might concern fees, customer service and delays in processing claims. In particular, FOS says it is being contacted by consumers whose CMC failed to process their PPI claim with their bank before the deadline, meaning that their claim couldn’t be considered.


The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article