Complaints about payday loans rise 22 per cent
The Financial Ombudsman Service (FOS) received 5,095 complaints about payday loans in the second half of last year, which was a 22 per cent increase on the number of complaints in the first half of the year.
“All walks of life” have been shown to be affected by payday loans, the ombudsman revealed, with complaints made by students, teachers, nurses and even vets, among others.
The increasing number of complaints has been partly attributed to the growing awareness of people’s rights when running into financial difficulties after taking out a payday loan.
There has also been a crackdown on the payday loans industry over the last few years, after the Financial Conduct Authority (FCA) took over regulation of the sector in 2014. Changes included the introduction of interest price caps, stricter affordability checks and also more scrutiny of adverts.
Overall, there were 149,854 new financial complaints made to the ombudsman during the second half of 2016, with mis-sold Payment Protection Insurance (PPI) the most complained about product. While the ombudsman received more than 78,000 complaints about PPI, the amount it receives in a typical week (3,000), is substantially lower than the record-high of 12,000 complaints a week.