High-cost credit complaints have soared by 130 per cent in the 2018/19 financial year as the Financial Ombudsman Service (FOS) warns that too many customers have been left to “struggle with unsustainable debt”.
The number of complaints made against unscrupulous lenders shot up from 17,256 to 39,715 last year with Wonga ceasing trading during the period following an avalanche of complaints.
High-cost credit was the most complained-about product for people aged 25 to 34, accounting for 37 per cent of gripes from that age group.
At the end of a volatile year that saw lenders collapse as a consequence of past unfairness, it’s vital that those remaining don’t allow history to repeat itself
It accounted for 16 per cent of complaints from 35 to 44 year olds and six per cent of 45 to 54 grievances, second only to PPI in both age groups, as FOS received its two-millionth complaint about that particular mis-sold product.
But FOS is clear that it is not just about Wonga – on the whole 149,933 complaints, out of the 388,392 lodged in total, were related to the banking and credit sector with an 89 per cent rise in consumer credit complaints.
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“What we’ve seen in this sector has been unacceptable: in too many cases, customers have been left to struggle with unsustainable debt,” she said.
“Looking at short-term lending in particular, the proportion of complaints we upheld – around six in every ten – shows diligent lenders have been the exception. At the end of a volatile year that saw lenders collapse as a consequence of past unfairness, it’s vital that those remaining don’t allow history to repeat itself.”
Today we shared our annual review which talks about the wide range of themes we’ve seen in consumer complaints and trends. Click here to find out more – https://t.co/IdpTUpugif . Please RT.
— Financial Ombudsman Service (@financialombuds) May 15, 2019
The results come in the same week as the Treasury Select Committee called on the government to set up a legal duty of care for financial service providers to ensure that they act in their customers’ best interests.
The Big Issue has been working with ethical lenders to offer people an alternative way to borrow in the short-term without being subject to the soaring interest rates and spiralling debt that can drive them to deeper poverty and homelessness.