Consumers warned on crypto as complaints against banks soar

Consumers have been warned of the risks of investing in unregulated activities such as cryptocurrency trading after a sharp rise in the number of complaints filed with the Financial Services Ombudsman.

In its annual report, the ombudsman notes several examples of individuals losing significant sums after finding themselves the victims of investment fraud.

“Global advances in technology across the digital world over the last 10 years, have unsurprisingly, left many consumers at a disadvantage in terms of their digital knowledge. Consumers should be mindful of the risks posed by investing in unregulated activities, such as cryptocurrency trading, which very often carries a higher risk and level of volatility, than regulated product offerings,” acting ombudsman MaryRose McGovern said.

In one complaint highlighted by the ombudsman, a woman borrowed €20,000 to make an investment in what she believed was cryptocurrency and later discovered it was a scam.

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In another case, a man lost €60,000 over a three-month period when he instructed his bank to transfer funds to what he believed was an investment platform, but which turned out to be a fraudulent company.

In a third example, one man lost €29,000 when he was tricked into using an incorrect Iban to transfer funds.

Banks dominate

Her comments come as 4,658 complaints were received by her office last year, resulting in €4.6 million in settlements made via its dispute resolution service in 1,153 cases. A further €2.5 million in compensation was awarded to resolve several other complaints.

Banks continue to be the largest single subject of complaints, accounting for 57 per cent of all cases, with the majority of these linked to customer service.

Mortgage were the subject of almost a quarter of the complaints received last year.

The ombudsman noted that these included 250 new tracker mortgage complaints “12 years after the first tracker mortgage complaints were received in 2009 by the FSPO’s predecessor, the Financial Services Ombudsman’s Bureau”.

Some 27 per cent of complaints related to insurance products, while a further 8 per cent centred on investment products, and 4 per cent on pension schemes.

Customer service

Overall, customer service was the main cause noted in almost a quarter of all complaints, indicating that it is not just a problem for banks.

“It is notable that 23 per cent of the complaints made to this office in 2021 were complaints about poor customer service from financial service providers.

“It is clear that many customers experience frustration with the level of customer service available from stheir provider when the customer is seeking to engage, and it seems that a more responsive service from providers could avoid many such complaints arising,” said Ms McGovern.

Some 275 new complaints were received in 2021 where the complainant introduced Covid-19 as a factor.