• Text size      
  • Send this article to a friend
  • Print this article

Payday borrowing complaint levels soar

COMPLAINTS about payday lenders have more than doubled in the last two years, the financial ombudsman has reported.

Some 794 new complaints about the £2.8 billion ­industry were received in the financial year 2013/14 compared with 296 in 2011/12, and the service warned these cries for help are likely just the "tip of the iceberg".

The ombudsman fears the stigma associated with payday loans is preventing many more people who use them from seeking its help.

The most common reason for someone making a complaint about a payday loan is that they are being chased for a debt they never took on in the first place, the ombudsman said.

Often this is due to fraudsters successfully applying for a payday loan by using another person's identity.

The volume of payday loan borrowers bringing a complaint to the Financial Ombudsman Service is still tiny compared with more than 66,500 people who sought help with payday loan debt from the charity ­StepChange last year.

Nearly two out of every three (63%) complaints about payday lenders are resolved by the ombudsman in the consumer's favour.

The payday lending ­industry is currently ­undergoing a competition investigation. The Financial Conduct Authority, which took over supervision of the sector in April, has been phasing in a clampdown on the lenders amid widespread concerns that some borrowers have found themselves caught in a debt spiral.

Contextual targeting label: 

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.