Big surge in payday loan complaints
A 'striking' surge in consumer complaints about credit, including payday loans, has been seen by watchdogs over the last year.
In its annual review of complaints, the Financial Ombudsman Service (FOS) said complaints about payday loans tripled in 2016/17 compared with the previous year.
More than half of these were upheld by the ombudsman service in consumers’ favour in 2016/17.
Overall, there were 25,984 complaints about consumer credit products and services in 2016/17, compared with 13,713 the previous year.
Within the total, complaints about hire purchase were also up year-on-year,with 5,029 complaints in 2016/17 compared with 3,072 the previous year.
Complaints about catalogue shopping, debt collecting, hiring leasing and renting, point-of-sale loans, credit reference agencies, guarantor loans, and logbook loans - where the borrower’s vehicle is put up as security - also increased year-on-year.
A huge clampdown on payday lenders has taken place in recent years, with firms now having limits on the amount of times they can roll a loan over and the amount of interest they can charge, to stop borrowers sinking into a debt spiral.
Makerfield MP Yvonne Fovargue has been at the forefront of the clampdown. Earlier this year Ms Fovargue, who chairs the all-party group on personal debt and finance in Westminster, said families struggling with mountains of personal debt urgently need a “breathing space” to regain control of their finances.
The Financial Conduct Authority (FCA) recently announced plans to put the high-cost credit sector under the spotlight.
Caroline Wayman, chief executive and chief ombudsman of the FOS said: “Whilst payment protection insurance (PPI) continues to make up a large proportion of the complaints we see, the most striking story this year has been the rise in complaints we’ve seen from people having trouble with credit. For example, we’ve seen around three times last year’s volumes of complaints about payday loans.
“It’s clear that financial difficulties and financial exclusion remain significant challenges for many people.”