COMPLAINTS about banks and financial institutions have soared to their highest levels in five years - with online scams becoming the one of the fastest growing concerns.

The Financial Ombudsman Service (FOS), which resolves cases when consumers and financial firms cannot come to an agreement, said the overall number of new complaints it saw in 2018-2019 rosed by 14 per cent annually to 388,392 – as consumers continue to complain about the lack of human touch from banks as they close high street branches.

Fraud complaints to the Financial Ombudsman Service alone have surged by 40% over the past year, as ever more victims are tricked into transferring money online to criminals.

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Authorised push payment (APP) fraud - a sophisticated scam which involves tricking customers into moving their money or handing over online banking passwords or codes - was one of the fastest-growing types of fraud, the ombudsman said.

Over 35,000 people lost a total of £145 million to it in the first half of 2018.

But a new security measure for online payments, which could help combat the fraudsters, due to be implemented this summer has been put back to March 2020.

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The Confirmation of Payee (CoP) system first announced in October 2018 was seen as the antidote to the high levels of APP fraud.

The additional security feature double check whether a name entered on an online bank transfer matches the sort code and account number on record.

But the Payment Systems Regulator (PSR) has found that the expected implementation deadlines were "unachievable" following consultation with industry groups.

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Since 2017, consumers and businesses have lost a total of £381m to APP fraud, and often have no way of getting their money back.

Caroline Wayman, chief ombudsman, said: "People manage their money in a variety of ways, and fraud and scams are becoming ever more sophisticated.

"We know from the complaints we see that banks aren't always treating victims of fraud fairly."

Which, the consumer organisation said that in the 2018-19 financial year, it received 12,195 complaints from consumers about fraud and scams, compared with 6,952 in the previous tax year – a 43% increase. This was a record total for the service, which started collecting statistics in 2015-16.

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Gareth Shaw, the group's head of money 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."

The consumer organisation has worked with the banking industry to develop a new voluntary code of conduct, which will allow innocent victims to claim reimbursement for their lost funds which is due to take effect on May 28. Under the new rules, banks should reimburse customers who lose money to a scam within 15 working days of their claim, or 35 if the bank needs to investigate further.

Mr Shaw added: “Banks have just two weeks to sign up to the new industry code, which will only be deemed a success if they finally halt this worsening crime by offering better protection to their customers, while swiftly and fairly reimbursing all those who lose money through no fault of their own."

The new figures come as consumer campaign groups have called for a regulator who will protect access to cash as Scots consumers face the double blow of ATMs and bank branches closing at an "alarming" rate.

Scotland has seen over 400 bank branches close since 2015, making it one of the worst affected areas in the UK. Banks who have made the cuts consistently say that it is the result of customers preferring to use online, mobile or telephone banking while usage of branches has fallen.

Aditya Arora, managing director of the International Business Unit at Teleperformance Digital Integrated Business Services said that while software robots supporting 'on the go' banking have been brought in to help prevent customer complaints surrounding forced hours spent on hold or promised call backs - there remained a need for more human contact.

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“Traditional banks are increasingly depending solely on automated responses by chatbots to solve customer problems – sometimes to their own detriment. In fact, 34 per cent of customers currently speak to chatbots just as a means to connect with a customer service advisor.

"Chatbots that mimic human conversations help solve simple to medium complexity queries, however there are times when customers need something beyond an automated helpline. That is when a human empowered with unique sentiments is able to sort out a complex situation, leading to increased customer satisfaction."

Ms Wayman added: "Too often we see that the interests of consumers are not hard-wired into financial services.

"This marks a five-year high in the number of complaints that consumers have brought to us, and the behaviour we've seen from some businesses is simply not good enough.

"While we do see examples of businesses responding well to customer concerns, we also see many firms who don't. Our message to businesses is that practices must improve."

The overall number of new complaints the FOS received came despite a decrease in PPI complaints.

PPI (payment protection insurance) is the biggest area of dispute that the Financial Ombudsman Service (FOS) has ever seen, with a total of more than two million complaints recorded.

But for the first time in 10 years, PPI complaints made up less than half of new complaints received, accounting for 46% of the total in 2018-19.

The FOS also said it saw a "startling" 130% increase in new complaints about payday loans, with nearly 40,000 new complaints brought last year.

Its report for 2018-19 also highlighted several other areas of concern. Banking and credit complaints were up 8% on the previous year, with 150,000 complaints brought to the ombudsman service.