Payday loan complaints up 200% in a year
The Ombudsman received more than 321,000 new complaints in the 2016/17 tax year and gripes about consumer credit products and services increased 89% from 13,713 in the previous year to 25,984.
Payday loan gripes soared by 227% from 3,216 last year to 10,529. The rise is despite a crackdown on payday lenders by the city watchdog, the Financial Conduct Authority (FCA). It imposed rules stating that a payday loan must never exceed twice the amount borrowed and just recently, online lenders were told to publish details of their products on at least one price comparison website to help borrowers.
Complaints about packaged bank accounts – previously an area of concern which led the FCA to introduce stricter eligibility criteria – halved, falling from 44,244 to 20,284. Some 37% of these complaints were brought by claims management firms and the Ombudsman found that many people were only prompted to complain when contacted by these firms.
PPI continued to dominate the Ombudsman’s workload. It received more than 168,000 complaints regarding the mis-sold product, however, complaints were down 11% from the 188,700 recorded in the previous tax year. The data also shows the upheld rate fell from 66% to 52%.
Below is a break down of total new complaints received and the biggest changes in complaints:
Geographically, the most complaints came from the South East including greater London (26%) while the fewest (2%) came from Northern Ireland. Females made up 40% off complainants while most gripes came from those aged between 45 and 54.
Caroline Wayman, chief ombudsman and chief executive of FOS, said: “Leaving PPI aside for a moment, the most striking story has been the rise in contact we’ve had from people having trouble with credit. We’ve seen around three times last year’s volumes of complaints about payday loans. The FCA’s action on high-cost short-term credit has had an impact – and we’re generally looking into complaints about borrowing that pre-date its tougher rules.
“What’s also not yet clear is how claims management companies – who brought 85% of all the PPI complaints referred to us in 2016/2017 – will act in the run-up to the two-year time limit for complaints. At the same time, the dramatic fall we’ve seen in complaints about packaged bank accounts shows how our proactive engagement with claims managers and their regulator can make a real difference in reducing the burden of unfounded claims.”