Latest figures from the Financial Ombudsman Service (FOS) have indicated that there was a surge in complaints about consumer credit services in the three months to September, with claims management companies said to have driven a big rise in complaints being upheld.
FOS says that between July and September 2020, there was a continued increase in complaints from people who borrowed money, who then felt the debt was unaffordable.
Complaints arising from Covid-19 also reflected the wide-ranging impact of the pandemic on people’s lives. The figures show that consumer enquiries hit 119,214 which was 10% higher than Q1 2020/21 and 36% fewer than Q2 2019/20
Guarantor lender complaints rose by around 300% between the first and second quarter of 2020, from 1,017 to 4,191.
Other key figures indicated that complaints about credit cards have continued to rise: quarter-on-quarter new complaints increased by 26% (to 3,828) and when compared to Q2 2019/20, new complaints about credit cards have increased by 66%.
Complaints about payday loans, though still high in number, are now much lower volumes compared to peak levels in 2018/19, when FOS were receiving in excess of 10,000 cases per quarter. In Q2 2020/21 FOS continued to see an increase in cases about guarantor loans and home credit: new complaints about guarantor loans increased quarter-on-quarter by 298% (to 4,191), and new complaints about home credit by 144% (to 3,199).
FOS also continued to see high uphold rates across credit products where there was the most complaints about unaffordable lending, for example, the uphold rate for guarantor loans this quarter was 88%, and home credit was 72%.