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Payday loan complaints see sharp rise despite new rules
This is a duplicate of the Blog Entry made on: 13th June 2017 19:01
This is a duplicate of the Blog Entry made on: 13th June 2017 19:01
Complaints about payday loans have risen sharply for the second consecutive year despite strict new regulations limiting interest charges.
The Financial Ombudsman Service (FOS) received 10,529 new complaints about these short-term credit products in the 2016-17 financial year. This was a rise from 3,216 complaints during the previous year. The increase was part of wider consumer concern about credit products - an area also worrying regulators at present. The City regulator - the Financial Conduct Authority (FCA) - and the Bank of England have warned of an acceleration in consumer borrowing, such as loans, overdrafts, credit card debt and car finance. The FCA is already conducting is own inquiry into overdrafts, door-to-door lending and other forms of loans. Consumer groups have consistently argued there should be an overdraft cap in place. A Lords committee also recently called for stronger controls such as a cap on "rent to own" products.
Financial exclusion 'challenge'
The FOS figures, published in its annual review, show that the total number of payday loan complaints was nine times higher than two years ago. Since the start of 2015, payday loan rates have been capped at 0.8% per day of the amount borrowed, and no-one has to pay back more than twice the amount they borrowed. Caroline Wayman, the chief financial ombudsman, said awareness among payday customers of their right to complain might have increased as a result of this well-publicised clampdown. Complaints have included high costs and interest rates, money being taken from accounts by a lender without permission, and damaged credit ratings despite claims that ratings would be boosted.
Read more here
The Financial Ombudsman Service (FOS) received 10,529 new complaints about these short-term credit products in the 2016-17 financial year. This was a rise from 3,216 complaints during the previous year. The increase was part of wider consumer concern about credit products - an area also worrying regulators at present. The City regulator - the Financial Conduct Authority (FCA) - and the Bank of England have warned of an acceleration in consumer borrowing, such as loans, overdrafts, credit card debt and car finance. The FCA is already conducting is own inquiry into overdrafts, door-to-door lending and other forms of loans. Consumer groups have consistently argued there should be an overdraft cap in place. A Lords committee also recently called for stronger controls such as a cap on "rent to own" products.
Financial exclusion 'challenge'
The FOS figures, published in its annual review, show that the total number of payday loan complaints was nine times higher than two years ago. Since the start of 2015, payday loan rates have been capped at 0.8% per day of the amount borrowed, and no-one has to pay back more than twice the amount they borrowed. Caroline Wayman, the chief financial ombudsman, said awareness among payday customers of their right to complain might have increased as a result of this well-publicised clampdown. Complaints have included high costs and interest rates, money being taken from accounts by a lender without permission, and damaged credit ratings despite claims that ratings would be boosted.
Read more here