Huge rise in loan disputes

Payday lender complaints rocket

COMPLAINTS about payday lenders have leapt by 453% since an industry crackdown.

The Financial Ombudsman Service received nearly 6,000 gripes about payday loans in the second half of last year, figures out today reveal. That is up from 4,186 in the first six months of 2016, and 920 between January and June 2015.

The total is still small relative to the size of the payday industry, but it marks a dramatic rise since new rules on payday providers came into force in January 2015.

The shake-up, overseen by the Financial Conduct Authority, included a cap on the sky high interest rates firms were charging.

The ombudsman upheld 57% of customer complaints about payday lenders in the second half of last year, broadly the same as in the first six months. Most of the firms cropping up on the ombudsman list for the first time were either payday lenders or debt collectors.

Payment protection insurance continues to be the biggest area of dispute, with the ombudsman taking on 78,000 new cases between July and December. That was out of a total of 150,000 new cases.

Chief ombudsman Caroline Wayman said: “PPI complaints are down, but there are some suggestions that this could be the calm before the storm. The FCA’s proposals – including the PPI deadline – are likely to heavily influence our complaints volumes.”

Complaints about packaged bank accounts fell by around a half to 9,100.

But disputes about general insurance rose 5% to nearly 18,000.

Bank of Scotland was the most complained about firm, with 19,555 new cases, just about ahead of Lloyds Bank (18,411) and Barclays (13,379).