Pay day loan complaints rise despite new legislation

The Financial Ombudsman Service (FOS) has found that complaints about pay day loans have risen once again, with there being nine times more complaints than two years ago.

According to the organisation’s annual report, 10,529 new complaints were logged relating to short-term credit products in the 2016-17 financial year.

Payment Protection Insurance (PPI) was the most complained about financial product, with 168,769 inquiries logged.

High costs and interest rates, damaged credit ratings and money being taken from accounts by a lender without permission are among other common gripes.

A new set of rules was put in place last month, asserting that pay day loan providers are now required to advertise on at least one price comparison website.

Caroline Wayman, the chief financial ombudsman, said “The most striking story this year has been the rise in complaints we have seen from people having trouble with credit.

“It is clear that financial difficulties and financial exclusion remain significant challenges for many people. The important thing is to speak up if you’re struggling. Money is often very complicated – and our job is to unravel what’s happened and find a fair way to put things right by looking at individual complaints.”

City regulator, the Financial Conduct Authority (FCA), and the Bank of England have both expressed concerns over consumer borrowing.

A Lords committee has also suggested that more stringent controls are needed in order to tackle the issue effectively.