Concerns have been raised about lenders ‘ treatment of customers with high-cost loans, after a record number of complaints to the ombudsman.
The Financial Ombudsman Service said complaints about the loans – ranging from store cards to payday loans – had increased by 40% in a year.
More than a third of these complaints were upheld by the ombudsman.
The report comes a day before the results of a major review of the sector by the Financial Conduct Authority.
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Excluding complaints about the payment protection insurance, almost one of every four complaints to the ombudsman service on consumer credit. These complaints have increased by 40% in the last financial year, to little more than 36,300, the service said.
The ombudsman upheld 61% of complaints about payday loans, what led to the concern that customers were not being treated fairly.
58% of the cases were also confirmed following complaints about the high cost of payment of loans – many of whom saw the existing debt refinanced, and then repaid over a longer period of time.
Caroline Wayman, chief ombudsman, said: “the People purchase a whole series of things on the credit of the daily routine of household appliances to a car – and in many cases it is manageable and affordable.
“For some people, the loan may be a necessity rather than an option. There can be a fine line between living and going under. Even the people who seem to be on top of your finances can quickly become vulnerable.”
Jason Wassell, executive director of the Consumer Finance Association, which represents short-term lenders, including some of the companies of pay day loans, said: “There are a number of reasons why we are seeing these reported figures, including the historical character of these complaints, strongly rooted in a dispute with the Financial Ombudsman Service in the interpretation and the growing involvement of claims management companies looking to generate complaints.
“What we can say, is that the majority of customers to borrow without any problem. The changes in the last few years means that people are paying less to borrow, they are less likely to attract additional charges and costs are covered.”
The report is the first by the Financial intermediary, as that announced that it had commissioned an independent review, following accusations that some of the complaints of consumers have not decided correctly. The claims were made in an investigation by Channel 4 Dispatches in the service.
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