Sharp Rise In Payday Loan Complaints

Consumer complaints about payday loans have risen sharply for a second year, despite new rules which were supposed to improve the industry. In 2017-2017, the Financial Ombudsman Service (FOS) had 10,529 complaints – a huge rise from the 3,216 complaints the year before. This comes at a time when experts are worried about the credit market in general. For example, we have mentioned previously the concerns that misuse of car loans could lead to a new financial crisis. The Bank of England and the FCA have both warned about the dangers of increasing loans, overdrafts and other forms of borrowing.

The BBC reports

“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… 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.”