Consumers have been warned of the dangers of investing in unregulated, volatile areas such as crypto after the Financial Services and Pensions Ombudsman (FSPO) received a higher number of complaints in the areas of investment fraud and cryptocurrency last year.

The ombudsman highlighted a number of cases involving crypto in its Overview of 2021 Complaints, having received 4,658 complaints and closed 5,010 cases through its various processes last year.

One consumer lost €60,000 over three months when he instructed his bank to transfer funds to what he believed was an investment platform but what turned out to be a fraudulent company while another man lost €29,000 after being "tricked" into using an incorrect IBAN to transfer funds.

Two separate consumers each lost €20,000 to cryptocurrency scams, while another person borrowed €20,000 through an overdraft and an online loan after a fraudulent investment company told him his investment had grown to €5,000, and he needed to lodge €20,000 to retrieve it.

MaryRose McGovern, the acting ombudsman, said technological advances over the past decade had "left many consumers at a disadvantage in terms of their digital knowledge.

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"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.

"The widespread availability of financial services online creates opportunities for consumers to shop around and gain access to a wide variety of financial products. However, this also carries significant risks, if a consumer is not familiar with the financial service provider they are dealing with, or if the consumer does not understand whether that provider is regulated, and whether the protections afforded by the consumer protection framework, are in place.”

The FSPO awards more than €7m in complaint outcomes last year, including €4.6m in mediated settlements in 1,153 complaints through its dispute resolution service and a further €941,328 in compensation was awarded to complainants following a formal investigation process.

Some €944,167 was paid to complainants by providers to resolve complaints during said formal investigation process, and €667,993 was paid by providers in redress. 91 complaints were not upheld because the offer in question was reasonable and adequate to redress the conduct leading to the complaint, and no formal direction by the ombudsman was required.

Around a quarter of complaints (23%) concerned customer service, with more than half of complaints (57%) related to banks and 23% related to mortgages, including 250 tracker mortgage complaints 12 years after the first tracker mortgage complaints were received.

Some 1,257 or 27% of complaints related to insurance products, most commonly claim handling or rejection of a claim, while 352 or 8% were related to investment products, primarily maladministration and customer service, and 186 or 4% were about pension schemes.

In addition to 600 Covid-19 related complaints received in 2020, a further 275 new complaints were received in 2021 where the complainant introduced Covid-19 as an element of their complaint. 

"It is notable that 23% of the complaints made to this Office in 2021 were complaints about poor customer service from financial service providers," McGovern said. "It is clear that many customers experience frustration with the level of customer service available from their provider when the customer is seeking to engage, and it seems that a more responsive service from providers could avoid many such complaints arising.

"The FSPO’s current Strategic Plan outlines that we will play our full part in helping to raise standards in complaints handling and resolution so that where possible, customer complaints are prevented from arising, and where such complaints arise, fairer outcomes are achieved.

"In this regard, I hope that the publication of this Overview, in addition to our regular publication of legally binding decisions and Digests of Decisions, will help to influence how financial service providers deal with complaints from their customers and promote the adequate resourcing of complaints-handling."

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