Rise in disputes taken to ombudsman

Credit cardsA record number of disputes between consumers and credit card companies were taken to the ombudsman last year, driven by a surge in people trying to recoup their cash after something went wrong with a purchase.

A 10% annual rise in the total number of credit card complaints during financial year 2011/12 was recorded by the Financial Ombudsman Service (FOS), amounting to 19,183, the largest figure since records began in 2001.
The watchdog said much of the increase was due to a rise in consumers trying to claim back money they had spent on their credit cards, under a rule which protects people if a purchase they make is not up to scratch.

Around a quarter of the credit card disputes in 2011/12 involved section 75 of the Consumer Credit Act, which gives consumers legal protection when people use credit to buy goods or services. The figure also included complaints about other issues such as interest rates and charges.

Under the Act, if goods do not arrive or they are not up to acceptable standards, people could be entitled to their money back from the firm that provided them with the credit.

The FOS said it has seen an increase in cases relating to this and is currently dealing with around 100 such complaints each week.

The watchdog upholds around 60% of credit card complaints and half of all financial complaints generally. It did not have an exact figure for the uphold rate for section 75 cases, but said it falls broadly within the credit card uphold rate.

Giving possible reasons for the complaints increase, a spokesman for the ombudsman said that in the tough economic climate consumers have been re-examining their finances and complaining about goods and services they are unhappy with. He suggested that people have also become more aware of their consumer rights.

The chief ombudsman urged people to make sure they are aware of their rights if they do not receive goods or services which meet expected standards when they use credit.

Chief ombudsman Natalie Ceeney said: "As more people are tightening their belts in these difficult financial times, it's more important than ever that people know their rights if you use credit and something goes wrong. So if you have a complaint and you're not sure where to turn, speak to the ombudsman."

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