Payday loan complaints double
Complaints to the Financial Ombudsman Service about payday lenders have rocketed. But they are just the "tip of the iceberg".
The Financial Ombudsman Service (FOS) has revealed that complaints about payday loans have more than doubled in the last two years.
In the 2013/14 financial year the FOS took on 794 new complaints regarding payday loans; in 2011/12 that figure stood at 296, meaning that there has been a 268% rise in complaints within two financial years.
What's more, the Ombudsman suggested that it should actually have received even more complaints, arguing that it has likely only seen the "tip of the iceberg".
Resolving issues
Worryingly, the most common cause for complaint was people saying that they hadn't taken out the loan in the first place. Payday lenders have been dogged by reports of fraudsters taking out payday loans in other people's names, with much criticism of the lax identity checks many employ. That the Ombudsman has received so many complaints about this suggests it is still a big problem.
Other complaints included poor service and administration, lenders being unwilling to help those struggling to repay and aggressive debt collection practices. Wonga last week hit the headlines after it was forced to pay out compensation to borrowers targeted by its questionable debt collection antics, which included posing as law firms to put pressure on borrowers to pay up.
In 63% of cases, the Ombudsman resolved the issue in favour of the complainant. It has warned lenders about their poor business practices and wants to see them take a more "positive approach" when tackling their borrowers' concerns.
The Financial Ombudsman also said that it was disappointed by the high number of people who were unaware that they could take their issues to the Ombudsman if they felt payday lenders were not treating them fairly.
Principal ombudsman Caroline Wayman says that the Ombudsman often hears from people who took out a payday loan as a desperate last resort and blame themselves when the debt starts to spiral out of control. She added: "It’s important that people don’t feel trapped with nowhere to turn because of the stigma associated with short-term lending.”
A comprehensive report looking into payday lending complaints is due to be released later in the summer.
Where to get help
There are a number of debt charities out there, such as StepChange Debt Charity, who will help you if you are struggling as a result of money issues. Read Where to get free debt advice to find the organisations that could help you if you’re experiencing financial difficulties.
Have you been treated unfairly by a payday lender? Were you aware that the Financial Ombudsman could help you resolve the issue? Let us know about your experiences in the comments below.
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