Payday lending complaints increase

Complaints about payday lenders in have increased as concerns about the solvency of firms and lax lending practices in the sector persist according to the Financial Ombudsman Services (FOS)

Caroline Wayman, Chief Executive of the Financial Ombudsman Service (FOS) said the state watchdog typically deals annually with around 100,000 complaints that financial firms have not been able to resolve on their own with customers.

“We have seen quite significant increases in demand for our services. Short term lending has been particularly acute,” Wayman told parliament’s Treasury Select Committee.

FOS had forecast around 20,000 short term lending complaint cases in its current financial year, but now expects at least 50,000, compared with about 2,000 annually in recent years.

“It would be even higher had payday sector leader Wonga not gone into administration last year.There were examples of multiple borrowings by the same customers, raising concerns about how the money was lent and affordability.”

“Some of the payday lenders are having difficulties in terms of their own solvency.”

Much of FOS’ work in recent years has focused on payment protection insurance or PPI, forcing banks to pay out over 30 billion pounds in compensation and making it Britain’s costliest retail financial scandal.

The FCA has set an August deadline for PPI complaints, meaning they are expected to become a smaller part of FOS’ workload after then.

Source: Yahoo Finance