Citizens Advice Scotland welcomes increase in complaints to the Financial Services Ombudsman saying people are more willing to report rogue lenders
Complaints to the Financial Ombudsman Service about payday loan companies more than doubled last year.
It acted on 794 new complaints in 2013/14 an increase from 296 the previous year.
Of those nearly two thirds (63%) were resolved in the consumer’s favour.
In total there were 5,395 enquiries directed to the ombudsman but it has called on more people to get in touch after it was revealed 66,557 enquiries were made to debt charity Step Change in the same period.
Principal ombudsman Caroline Wayman said: “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.
It’s clear that the actions of many payday lenders are getting more and more Scots into the misery of spiralling problem debt
“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.”
The most common cause for complaint was people saying they hadn’t taken out the loan and concerns were also raised about poor service and administration, lenders not being willing to help those struggling to repay and aggressive debt collecting practices.
Citizens Advice Scotland (CAS) said the ombudsman’s figures reflect people becoming more assertive and less likely to accept poor practices from payday lenders.
It has published a simple guide setting out what customer’s rights are when borrowing money from a lender and also what the lender’s responsibilities are.
CAS also echoed calls for other victims of rogue lenders to speak out, report their experiences and to seek help.
Margaret Lynch, CAS chief executive, said: “Scottish Citizens Advice Bureau advisers continue to see over 100 people every week with a complaint about a payday lender. It’s clear that the actions of many payday lenders are getting more and more Scots into the misery of spiralling problem debt.
“So it’s good news that people are becoming more willing to report rogue lenders, and we encourage people to continue to come forward and report bad practice, as well as seeking help with their debts.”
Step Change chief executive Mike O’Connor said enquiries to it had almost doubled last year from 36,413 in 2012.
He added: “The payday loan industry has been a problem for many years. The fact that most complaints against payday loan companies are upheld is further evidence that when it comes to acting in the best interests of consumers, in many cases they fail to do so.
“We know that payday loans are often a last resort for people who are already in serious financial difficulty. We urge anyone struggling with any form of debt to get free and impartial debt advice at the earliest opportunity.”
