The number of credit card complaints soared last year to become the second-biggest cause of financial product dissatisfaction, the Financial Ombudsman Service (FOS) has said.
The number of overall complaints to the financial watchdog increased by 25% last year, with more than 250,000 cases being dealt with.
Complaints over payment protection insurance were top of the list of cases for the FOS, as more and more people tried to claim back money following the high-profile court case last year.
The FOS said it received around 130,000 complaints about payment protection insurance (PPI) last year – the biggest single category of complaints ever received.
But credit cards came second in the list, as the collapse of retailers and budget airlines has seen customers attempting to claim back money.
“The pain of the recession has begun to bite deeply, and this is showing up in our figures,” said Martyn James, a spokesman for the FOS.
There was a 10% rise in the number of credit card complaints to the ombudsman last year, amounting to more than 19,000 cases.
This is the largest number since records began, and pushed credit cards past current accounts as the second-biggest complaint area.
The main reason for the surge is customers claiming refunds with their credit card companies after the collapse of a retailer or travel agency.
Customers can use Section 75 of the Consumer Credit Act, which states that credit card companies are liable if there is something wrong with goods or services paid for with plastic.
More customers are aware of Section 75, but the FOS has said that more credit card companies are making it harder to claim a refund.
“A common misconception is that the customer must first exhaust all other channels of complaint,” added Mr James.
“This is not the case, and issuers have no right to tell consumers to pursue the retailer first. Once asked for a refund, they have a legal liability to respond.”
With the economic downturn continuing to squeeze people’s finances, the FOS is urging customers to know where they stand with their rights.
Natalie Ceeney, chief ombudsman at the FOS stated “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,” she added.
