Payday loans fuel problems

PAYDAY lenders charging skyhigh interest rates have fuelled a surge in complaints to a consumer watchdog.

The Financial Ombudsman Service is expecting 14,500 complaints about short-term credit in the 12 months to March 31 – 4,500 more than it previously predicted.

Sources put the rise down to an aggressive crackdown on misbehaving lenders by the Financial Conduct Authority, meaning customers are more aware of their rights.

The figure may also have been boosted by interest from claims management firms, which will take up consumers’ cases for a share of the compensation.

Payday firms’ charges have been capped by the FCA after a string of scandals. Wonga, one of the biggest, sent threatening letters from a fake law firm to overdue customers.