Payday loans: do you have cause for complaint?
Payday loans and the problems they cause are hot topics at the moment. Despite this, the Financial Ombudsman Service (FOS), the independent body that settles complaints between consumers and businesses, only receives 30 -40 complaints a month about payday loans. And yet, each day the Citizens Advice Bureaux (CAB) service helps an average of 60 clients with their payday loan problems.
So why the lack of official complaints? Are the newspaper clippings all spin or are consumers finding it difficult to complain? Our evidence suggests the latter. In the last four years we have seen a ten-fold increase in the proportion of clients receiving casework help who had multiple debts that included payday loans.
Our payday loan survey results show that, since November last year, over 2,000 people have had problems with their payday loans. So why are these numbers not reflected in the FOS complaints statistics? Is it simply because they don’t know they can complain or is the complaints process itself putting people off?
Firstly, we’ve heard that getting in contact with a lender is often difficult. Of those with repayment problems who completed our survey, over half found it difficult to contact their lender. As one respondent said:
“The website is ‘currently under maintenance’ and yet the emails they have sent still state that you can log in to the website to make a payment. Their contact numbers are mobile numbers and one of the numbers given out ‘was not recognised.’”
Secondly, the time it takes to make a complaint could be putting people off. To complain about a payday lender you first need to write to them. Then, if you aren’t happy with their response after eight weeks you have to write to the lender’s trade association or the FOS. It’s a world away from taking out the loan, where you can have money in your account almost instantly.
Thirdly, lenders aren’t telling consumers what to do if they have a complaint. Despite promises in their good practice charter to do so, our latest survey found only 21 percent of lenders actually upheld this.
So what is the CAB service doing about this? To make sure you get the redress you deserve, we’ve been working with the FOS to help simplify the complaints process. Our payday loan survey helps you establish whether or not you have grounds for a complaint. And now if you want to complain you’ll be able to submit your name and phone number and someone from the FOS will call you to guide you through the process.
So the advice is clear. If you’re having problems with a payday loan you can take action. Know your rights, talk to us and don’t be afraid to complain. Don’t let short term debt lead to long-term problems.