13 June, 2017
Complaints about payday loans tripled in the 2016/17 financial year compared to the previous year, the Financial Ombudsman Service's annual report reveals.
The Ombudsman received more than 321,000 new complaints in the 2016/17 tax year and gripes about consumer credit products and services increased 89% from 13,713 in the previous year to 25,984.
The biggest rise was in complaints about instalment loans, which are generally paid back over a long period of time.
Recent years have seen a tightening of regulations surrounding payday lenders, including limiting the amount of interest they can charge to prevent people getting further into debt.
Complaints about packaged bank accounts - previously an area of concern which led the FCA to introduce stricter eligibility criteria - halved, falling from 44,244 to 20,284.
Caroline Wayman, chief executive and chief ombudsman of the FOS said: "Whilst payment protection insurance (PPI) continues to make up a large proportion of the complaints we see, the most striking story this year has been the rise in complaints we've seen from people having trouble with credit".
Mortgage complaints made up 2.5 per cent of total enquiries, down slightly from 3 per cent the year before. Females made up 40% off complainants while most gripes came from those aged between 45 and 54.
'It's clear that financial difficulties and financial exclusion remain significant challenges for many people.
More than half - 59 per cent - of payday loan complaints were upheld by the ombudsman service in consumers' favour in 2016/17. General insurers were the subject of 14 per cent of complaints and 6.5 per cent of complaints were directed at consumer credit businesses.
Following PPI, the most complained about sectors in the last financial year were banking and credit at 31%, insurance (excluding PPI) at 12%, and investments and pensions at 4.5%.
Bank of England figures from January 2017 show that unsecured debt - or debt that is not protected by a guarantor - is at its highest level since the 2008 financial crisis.