The latest complaints figures from the Financial Ombudsman Service (FOS) indicate both that more complaints are being made about payday lenders and that a large proportion of payday lending complaints are being upheld.
The FOS, the independent complaints adjudicator, reported that it received 4,186 complaints about payday lending in the first half of 2016, which is more than double the equivalent figure for the last six months of 2015.
Payday lenders are also not doing well when it comes to the final decisions the FOS makes on their complaints. The organisation upheld 48% of all the complaints it closed in the first half of the year, but this figure rises to 53% when only payday loan complaints are considered. Furthermore, some payday lenders had even higher uphold rates, for example 72% of complaints concerning WDFC UK Limited (better known as Wonga) were upheld, as were 61% of those concerning CashEuroNet UK LLC, which trades as Quick Quid and Pounds to Pocket.
In total, the FOS received 169,132 new complaints between January and June 2016, an increase of 3% when compared to the previous six months. Complaints about payment protection insurance (PPI) were once again down, if only slightly, at 91,381 (compared to 92,667 in the previous period).
PPI complaints continue to account for the majority of the FOS’s workload, with this product being the subject of 54% of the complaints. However, non-PPI complaints increased by 8%.
Lloyds Bank had the most complaints during the first half of the year, with 22,241. Bank of Scotland, also part of Lloyds Banking Group, was only a little way behind on 22,090. Barclays received 18,603 complaints and HSBC was fourth with 11,082.
FOS chief ombudsman Caroline Wayman said:
“The data we have published about complaints over the last decade or so helps to illustrate a period that’s been challenging and volatile for many financial businesses. But the current signs are that complaints are now broadly levelling off and moving onto a more even keel.
“Although it’s a few years now since PPI complaints peaked, we have been receiving over 3,000 cases a week for six years running – despite wider expectations that numbers would fall. And we’re continuing to deal with the issues and uncertainties around PPI which remain a significant challenge for everyone involved.
“Lots of factors can influence the complaints we see, from more people knowing more about their rights when things go wrong to external factors like volatility in the stock market or extreme weather conditions. That’s why I believe it’s important that we continue to share our insights into complaints to help businesses to avoid the mistakes of the past.”
The Consumer Finance Association, a trade association that represents a number of payday lenders, chose to concentrate on the results of a recent survey rather than on the FOS figures. Chief executive Russell Hamblin-Boone commented:
“We are obviously disappointed with the number of complaints, but this must be viewed in perspective. Of around a million loans funded there were about 2,000 upheld complaints.
“The true picture is represented by a recent customer satisfaction survey by Smart Money People, which showed that 95% of short-term credit customers felt they were treated fairly against an average of 88% of all credit customers.”
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.