Borrowers on warpath

Payday complaints rocket 230%

A BORROWING binge has fuelled a dramatic rise in complaints

The Financial Ombudsman Service (FOS) received nearly 26,000 gripes about consumer credit products and services in the year to April – a huge increase of 89%.

The biggest problem was payday loan firms, where complaints rocketed 230% to more than 10,500.

The FOS said “people from all walks of life” had problems with them.

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.

There was also a 318% leap in complaints involving instalment loans, another form of short-term lending.

Big increases were also seen in moans about hire purchase, point of sale loans and catalogue shopping which jumped 74%.

FOS chief Caroline Wayman called the increase “striking”.

It comes amid a sharp rise in consumer credit, boosted by rock bottom interest rates.

Borrowing on credit cards is rising at the fastest rate for 11 years, with £68billion owed on credit.

Lenders insist the number of borrowers falling behind with repayments remains low.

But data from the FOS, which referees in disputes between customers and lenders, showed complaints about debt collecting jumped from 707 to 1,027 last year.

In total it received more than 321,000 complaints last year.

Just over half of those – nearly 168,800 – were about the misselling of payment protection insurance.