RegulationOct 17 2014

Payday lending complaints rise

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Payday lending complaints are averaging approximately 70 new cases each month, according to the Financial Ombudsman Service.

So far this year, between 1 January and 30 September, Fos took on 613 new payday loan complaints, compared to 506 in the same period last year.

The figures were revealed as the Competition and Markets Authority recommended that websites selling potential borrowers’ details to lenders should explain their role much more clearly.

The moves are part of a plan to reform the payday lending market, and the CMA is set to publish a final report at “at the turn of the year”.

Katherine Liggatt, a spokesperson for Fos, said: “We regularly hear from people whose debt is keeping them awake at night. They took out a payday loan as a desperate last resort and their debt problems have got worse instead of better.”

“Don’t suffer in silence. If you have a problem with a payday loan that you can’t sort out, don’t hesitate to get in touch with the ombudsman. We’ll help you quickly get things sorted.”

Adviser view

The FCA began its crackdown on payday lenders in October 2013, when it opened a consultation on lending rates. At the time, Chris Budd, managing director of Bristol-based Ovation Finance, said: “The regulation is long overdue and, of course, welcome. Payday lenders are not all terrible. The small focus on annualised percentage rates is not helpful as the calculations on short-term loans are misleading but I applaud the FCA for focussing on the areas that it has.”