Complaints about consumer credit including payday loans and hire purchase showed a rise in the second quarter according to latest statistics released by the Financial Ombudsman Service (FOS).
Consumer credit complaints totalled 7,281 in the three months to June 30, up from 5,846 in the same period last year. Payday loans, which provide short-term credit at high-interest rates, made up nearly half of consumer credit complaints at 3,126. Hire purchase was next, generating 1,334 complaints, followed by point-of-sale loans on 1,009 and catalogue shopping on 556.
The 7,281 total also includes installment loans, credit reference agencies, store cards and debt collection. The FOS said that consumer credit complaints in the financial year that ended in April leapt by 89%, compared with a 40% in the previous year.
Chief Ombudsman Caroline Wayman said, “Although not every credit complaint is about trouble with debt, we’ve continued to hear from people who are struggling.”
“As preferences change for example, from payday loans to installment loans we’ve seen that lenders still aren’t always making the right call in checking people will be able to repay what they owe. Lenders still aren’t always making the right call in checking people will be able to repay what they owe,”
FOS said that payment protection insurance (PPI), remains the most complained about part of the market. Consumers have until August 29, 2019, to claim compensation for mis-sold PPI. Payday loans accounted for half of the complaints made by consumers.