The new figures mean that Guarantor loans have overtaken Payment Protection Insurance (PPI) as the most complained about product that the Financial Ombudsman Service adjudicates on.
Credit, Collections & Insolvency News
Latest date from the Financial Ombudsman Service (FOS) has shown that guarantor loans were the most complained-about product during the three months period between October to December 2020.
The new figures mean that Guarantor loans have overtaken Payment Protection Insurance (PPI) as the most complained about product that the Financial Ombudsman Service adjudicates on.
Complaints about this type of loan reached 10,321, up from just over 303 in the same period a year before. Complaints have leapt by more than 3,000% averages out at 112 complaints a day, or 785 a week. FOS says that the high levels of detriment may be a factor in the level of claims management company (CMC) activity in the complaints about credit products brought to the service. CMCs are involved in more than half of the complaints (54%) about credit products we see, compared with an average of just over a third of complaints (35%) in FOS casework as a whole.
In contrast, the Ombudsman received 6,679 PPI complaints over the last three months of 2020, compared with over 41,500 complaints in the same period a year earlier
Guarantor loans require a friend or family member to guarantee they will take on repayments if the borrower falls behind.
Loans are backed by a relative or friend and have seen Amigo become UK’s most complained about financial firm.
The sharp increase meant that for the first time in 13 years, payment protection insurance (PPI) was not the most complained-about financial product.
FOS says that consumers have turned to loan providers since last March as lockdowns to fight the Covid-19 pandemic strained their finances with complaints about consumer loans usually focused on inadequate affordability checks.
