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Complaints about banking fraud and scams hit an all-time high in the past financial year, according to the UK’s Financial Ombudsman Service, prompting campaigners to claim that financial fraud is “spiralling out of control”.

Over 12,000 customer complaints about financial fraud were logged with the ombudsman in 2018/2019, an increase of 40 per cent on the previous year and more than double the volume received three years previously.

Push payment banking scams, where customers are conned into authorising money transfers online, has driven the rise in complaints according to the ombudsman, which described it as “one of the fastest-growing types of fraud”.

“Fraud and scams are becoming ever more sophisticated,” said Caroline Wayman, chief executive of the FOS. “We know from the complaints we see that banks aren’t always treating victims of fraud fairly. They must do better.”

According to trade body UK Finance, customers lost almost £145m to push-payment fraud in the first half of 2018 alone. Banks have until the end of May to sign up to a new voluntary code of practice aimed at protecting customers from push payment fraud and compensating them more readily in certain circumstances.

Gareth Shaw, head of money at consumer group Which?, said: “Bank transfer fraud is spiralling out of control, with people losing life-changing sums every day and then facing a gruelling battle to get their money back from the very banks that should be preventing them from falling victim in the first place.”

Overall, the FOS said that the level of complaints about financial services companies had hit a five-year high. The ombudsman received more than 388,000 new complaints in the past financial year, a 14 per cent increase on the previous year.

Complaints about payday loans surged by 130 per cent in 2018/2019 compared to a year previously, with almost 40,000 new complaints lodged over the period, which included the collapse of Wonga, the UK’s largest payday lender.

Payday loans accounted for more than 10 per cent of all new complaints in the most recent financial year according to the ombudsman, up from just 5 per cent the previous year.

Customer grievances about payday loans have increased sharply in recent years despite a crackdown by the UK financial regulator in 2015 designed to cut high-cost lending fees and better protect customers.

In total, the FOS upheld half of customers’ complaints about consumer credit, and described the behaviour of some payday lenders as “unacceptable”.

Bank IT failures also accounted for some 15,000 complaints logged with the FOS last year, an 8 per cent increase on the previous year.

This follows a major IT glitch at TSB, which left large numbers of customers unable to access their accounts and resulted in a deluge of complaints and wave of executive departures.

“Banks must consider the impact on individual customers when things go wrong, regardless of whether the IT problems were avoidable,” said the FOS.

Investment-based crowdfunding experienced one of the biggest increases in complaints over the year at 200 per cent, although just 78 complaints were received.

Despite having now received 2m complaints about payment protection insurance in total, the FOS said the flow was reducing as August’s PPI deadline approaches, with PPI making up less than half of new complaints received for the first time in 10 years.

Letter in response to this article:

Ethical lenders won’t prey on the financially excluded / From Andrew Rabbitt, Chief Executive, incuto, Ilkley, W Yorks, UK

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