Financial News

  • 9 July 2014, 8:16

Payday Loan Complaints Double In Two Years

The number of complaints about payday loans has more than doubled since 2012 - with the most common gripe being from those who said they had been pestered for cash even though they had not taken out a loan.

The Financial Ombudsman said 794 people made complaints about payday lending in the 2012/13 financial year compared with fewer than 300 in the previous twelve months.

In almost two thirds of cases that were taken on, the office found in favour of the consumer.

The Ombudsman plans to release a more detailed report later in the summer but it warned that many customers struggling to repay loans felt powerless to complain and urged people to "confront the shame factor" and speak up about debt worries.

The statistics were released four weeks after the Competition and Markets Authority identified a lack of price competition in the sector which it said meant that payday loan customers may be paying too much to borrow.

Its preliminary findings calculated that consumers were forking out up to £10 over the odds for a typical loan.

Principal ombudsman Caroline Wayman said: "We often hear 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.

"It's important that people don't feel trapped with nowhere to turn because of the stigma associated with short-term lending."

The payday industry, which is also facing regulatory pressure on misleading advertising, has been forced to adopt new rules which are aimed at better-protecting borrowers.

The country's biggest payday lender, Wonga, was last month penalised £2.6m for threatening customers in arrears with letters from fake legal firms.

The Financial Ombudsman said that if people felt they had been treated unfairly by their payday lender they could contact the ombudsman on 0800 0 234 567.

 

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