A “concerning” rise in vehicle-related complaints has been recorded by the financial ombudsman, which said it is increasingly hearing from people who are worried about whether they can pay their finance deals.

The Financial Ombudsman Service (FOS) said complaints have been increasing in two separate sectors – consumer credit and insurance.

From July 1 to September 30 2023, on the consumer credit side, the ombudsman received 4,622 motor-related complaints about hire purchase and 1,569 about conditional sale agreements.

On the insurance side, there were 4,036 complaints about car and motorcycle cover. These are the highest complaint levels that the FOS said it has received for each of these three products in more than five years.

In total, disputes arising from both the financing and insuring of people’s cars, motorcycles and caravans reached 11,869 complaints. In the same period the year before there were 6,744 complaints to the ombudsman about issues related to motor vehicles.

Buying a vehicle can be costly and stressful, and we're now also increasingly hearing from people worried about whether they can pay their finance deals

While car finance agreements and car and motorcycle insurance made up the vast majority of claims, other vehicle-related complaints included those about insurance for roadside assistance, caravans and commercial vehicles, as well as motor warranties, the ombudsman said.

When issues occur with people’s cars or motorcycles, and they need to claim on their insurance, complaints may arise over issues including disputes about vehicle valuations, customer service issues, and delays in claim settlements, it added.

Abby Thomas, chief executive and chief ombudsman of the FOS, said: “Many people depend on their cars so it’s concerning to see such a significant rise in vehicle-related complaints.

“Buying a vehicle can be costly and stressful, and we’re now also increasingly hearing from people worried about whether they can pay their finance deals.

“What is clear is that whatever the perceived issue, firms need to ensure they are treating customers with transparency and fairness.”

The ombudsman service also said its complaints data shows that many car finance agreement claims are being submitted by professional representatives. Altogether they account for more than 90% of cases the ombudsman is seeing related to unaffordable or irresponsible lending, and 70% of complaints about fees, charges and commission.

The uphold rate for these motor finance complaints brought by professional representatives was 8%, compared with a 42% uphold rate when cases in the same category were brought directly by consumers, the ombudsman said.

Last week, the service launched a consultation on new powers to charge claims management companies and other relevant professional representatives.

James Dipple-Johnstone, deputy chief ombudsman said: “While professional representatives can play an important role in resolving financial disputes, we’re seeing too many speculative and poorly evidenced complaints.

“The vast majority of motor finance complaints are now brought by professional representatives.

“We’re seeing a mix of both good and bad practice, but with an uphold rate of just 8%, it’s clear some representatives could do more to learn from our established approach about which cases are likely to have merit and advise their clients accordingly.

“It’s important to remind consumers also that they do not need to use a professional representative as our service is free, independent and easy to use.”

We're working with our members and the FOS to understand where improvements can be made

A spokesperson for the Association of British Insurers (ABI) said: “We’re concerned to see these latest motor insurance complaints figures from the Financial Ombudsman Service.

“While challenges beyond insurers’ control, such as delays to car repairs, caused by some spare part shortages, can impact on timings, insurers work hard to process claims as quickly and efficiently as possible.

“Our members always strive to provide the best possible customer service and understand the importance of clear and timely communication to support the customer throughout any claim.

“We’re working with our members and the FOS to understand where improvements can be made, in particular any learnings from the complaints that have been upheld.”