Consumer credit complaints to FOS up 89%

Complaints about consumer credit increased by 89 percent for the year ending April 2017 compared to the year before, according to the FOS.

Consumer credit complaints to FOS up 89%

The increase emerged in complaints data for the first quarter of 2017 (between April and June), published by the ombudsman, along with information on the previous full year.

It found that, excluding PPI, consumer credit complaints accounted for 17.5 percent of all complaints in 2016/2017– compared with nine percent in 2015/2016.

As for the first quarter of 2017, FOS received 80,000 new cases and 135,000 enquiries. It also upheld 35 percent of all complaints it resolved.

New cases FOS received between April and June 2017 included:

  • 42,401 related to PPI (for which 40 percent of cases were upheld)
  • 5,229 related to current accounts (27 percent upheld)
  • 3,137 related to car and motorcycle insurance (29 percent upheld)
  • 3,126 related to payday loans (68 percent upheld)
  • 3,097 related to packaged bank accounts (13 percent upheld)
  • 2,640 related to credit card accounts (30 percent upheld)

FOS said it has continued to hear from people who’ve fallen into debt – who may argue they shouldn’t have been lent to at all.

It said a significant proportion of people are unhappy with the quality of the goods or services they’ve got on credit, frustrated by administrative issues, or caught up by charges they hadn’t expected.

Caroline Wayman, chief ombudsman, said: “Although not every credit complaint is about trouble with debt, we’ve continued to hear from people who are struggling.

“As preferences change – for example, from payday loans to instalment loans – we’ve seen that lenders still aren’t always making the right call in checking people will be able to repay what they owe.”

An example of such a payday loan case is here:

Mr L had gotten into debt with several payday loans, he complained he should not have been lent to for two of the loans. The lender told the ombudsman that Mr L’s loans had been approved by its system and nothing had been flagged.

FOS found that Mr L was applying for loans as soon as he had paid off his most recent loan. Therefore, the ombudsman viewed this as Mr L being reliant on lending and just because the lender’s system hadn’t flagged anything it didn’t mean he should have been lent to.

Mr L wanted the lender to pay back all the money he shouldn’t have been lent. The ombudsman said that considering Mr L had used the money lent it wouldn’t be fair to request all the money back.

Instead the ombudsman told the lender to refund all the interest fees and charges Mr L had paid for the loans adding eight percent simple interest. The lender was also told to remove the adverse entries relating to these loans on Mr L’s credit file.