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FOS issues payday lender warning as complaints rocket

The Financial Ombudsman Service has warned complaints about payday lenders have more than doubled in the last two years but says the increase is likely to be only the “tip of the iceberg”.

New statistics published today show that in the 2013/14 financial year the FOS tackled 794 new payday lending complaints, up from 542 in 2012/13 and 296 the year before.

The ombudsman says it has ruled in favour of the consumer in 63 per cent of cases, having received 5,395 enquiries about payday loans during the period.

The figures come after the FCA announced payday lender Wonga would pay £2.6m in client redress. The firm’s list of offences included sending out letters from fictitious law firms demanding debt repayment.

The FOS received 3,104 complaints about investment-linked products in 2013/14, down by 34 per cent from 4,697 the previous year.

Ombudsman principal Caroline Wayman says: “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.

“Money problems can affect everyone – but the good news is that there is light at the end of the tunnel. If you have a problem with a payday loan, get in touch with the ombudsman straight away. We’ll contact the lender on your behalf and help to quickly get things sorted.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. “Ombudsman principal Caroline Wayman says: “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.

    “Money problems can affect everyone – but the good news is that there is light at the end of the tunnel. If you have a problem with a payday loan, get in touch with the ombudsman straight away. We’ll contact the lender on your behalf and help to quickly get things sorted.”

    Are FOS now turning into the CAB? I thought FOS was there to rule on complaints after the firm has had issued a decision letter, or has taken more than 8 weeks to deal with the complaint.

    Are they regulated by the MOJ as a claims management company?

  2. headbelowthe parapet 8th July 2014 at 1:52 pm

    Parkinson’s Law in action – she’ll need to multiply her subordinates in order to deal with the extra work she’s inviting…

  3. Philip Castle 8th July 2014 at 2:15 pm

    Whilst I don’t like the over use of payday lenders, they are somewhat better than loansharks (just). I woudl also like to know why this lady has implied the FOS system has changed to “If you have a problem with a payday loan, get in touch with the ombudsman straight away.”
    I thought complaints were supposed to go to the firm FIRST. as others have said, if this increases costs for the firm and the FOS without a change in the rules, then the FOS and it’s staff are acting ultra vires.

  4. Context is everything in this story – the 794 complaints compares to the 400,000 complaints regarding PPI… According to todays Grauniad (p26 if you’re scoring at home) Caroline Wayman is ‘scratching her head’ as to why there are so few payday loan complaints.

    One reaspon, cited by the Guardian, is that the average loan is just £250 – so many people might think its not worth the bother.

  5. Why isn’t the DPP prosecuting directors and officers of Wonga for the frauds they perpetrated in sending out letters falsely claiming to from law firms?

    Why hasn’t the FCA withdrawn their OFT licence and banned senior people, as they would have done with a smaller firm?

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