Payday loan complaints see sharp rise despite new rules – BBC News

Image copyright Getty Images
Image caption Payday lenders have been subject to various tighter regulations

Complaints about payday loans have risen sharply for the second consecutive year despite strict new regulations limiting interest charges.

The Financial Ombudsman Service (FOS) received 10,529 new complaints about these short-term credit products in the 2016-17 financial year.

This was a rise from 3,216 complaints during the previous year.

The increase was part of wider consumer concern about credit products – an area also worrying regulators at present.

The City regulator – the Financial Conduct Authority (FCA) – and the Bank of England have warned of an acceleration in consumer borrowing, such as loans, overdrafts, credit card debt and car finance.

The FCA is already conducting is own inquiry into overdrafts, door-to-door lending and other forms of loans. Consumer groups have consistently argued there should be an overdraft cap in place.

A Lords committee also recently called for stronger controls such as a cap on “rent to own” products.

Financial exclusion ‘challenge’

The FOS figures, published in its annual review, show that the total number of payday loan complaints was nine times higher than two years ago.

Since the start of 2015, payday loan rates have been capped at 0.8% per day of the amount borrowed, and no-one has to pay back more than twice the amount they borrowed.

Caroline Wayman, the chief financial ombudsman, said awareness among payday customers of their right to complain might have increased as a result of this well-publicised clampdown.

Complaints have included high costs and interest rates, money being taken from accounts by a lender without permission, and damaged credit ratings despite claims that ratings would be boosted.

Nearly two-thirds (59%) of complaints have been upheld by the independent ombudsman.

“The most striking story this year has been the rise in complaints we have seen from people having trouble with credit,” said Ms Wayman.

“It is clear that financial difficulties and financial exclusion remain significant challenges for many people. The important thing is to speak up if you’re struggling. Money is often very complicated – and our job is to unravel what’s happened and find a fair way to put things right by looking at individual complaints.”

Other areas of complaint included hire purchase agreements and debt collecting.

The most-complained about financial product was still Payment Protection Insurance (PPI) which led to 168,769 inquiries in 2016-17 – just over a half of the ombudsman’s workload.

The loan insurance was mis-sold to millions of people who did not want or need it, or who were illegible to claim. The banking industry has paid out billions in compensation and has set aside more to settle up before the compensation claims deadline of August 2019.

More From this publisher : HERE

    Recommended Products

  • Sales Like Hot Cakes Advance Membership TURNKEY AMAZON + SHOPIFY SYSTEM: The Ultimate Step-By-Step Crash Course to get you from ZERO to $47,812 per month: All the TOOLS you need + A Team of Professionals ready to Guide You All the way to SUCCESS
  • IM Affiliate Funnel 2.0 IM Affiliate Funnel 2.0 - Affiliate Marketing Strategies To 5 Figure Promotions. Limited Time Special Offer.
  • Green Screen Academy DFY Package The 3-in-one Green Screen Suite that gives you all the tools to transform your videos, adding a touch of class to your video production.
  • Viking PLR Bundle 2017 MK Viking PLR is an awesome collection of internet marketing related PLR packages each including a free report, an ebook, and a video course. These packages come with full private label rights and can be rebranded if you so choose. :)