Three out of four payday loan customers could have grounds for complaint

The Momentum UK Team 05 August 2013

Three out of four payday loan customers could have grounds to complain to the Financial Ombudsman Service (FOS) according to the Citizen’s Advice Bureau (CAB).

In a survey of cases reported to the CAB between 1st January and 30th June 2013, it was found that at least 76% could have grounds for complaint. One in five were possible cases of fraud, where a person was chased for a loan that they didn’t take out, and more than a third involved problems with continuous payment authorities - including cases of money being taken out that was not authorised.

The research found that 12% of the cases that were handled badly involved harassment, where lenders pestered customers with phone calls and text messages rather than accepting affordable repayment offers. One in ten was about lenders mistreating people in financial difficulty. On top of this, figures from the Citizen’s Advice payday loan tracker found that 4 out of 5 people had not been told how to complain to their lender if something went wrong.

Today, Citizen’s Advice launches a month-long campaign urging payday loan customers to be aware of their rights, and not let predatory lenders get away with treating them unfairly. Citizen’s Advice chief executive Gillian Guy said:

“The level of debt and hardship caused by some payday loans is absolutely scandalous and people often feel completely powerless to do anything about it. But consumers can fight back.”

She went on to stress the importance of reporting bad lender behaviour:

“By making your voice heard you will expose the bad behaviour of lenders and put pressure on them to clean up their act which could help stop similar problems happening to other people.”

Consumers who have complained to their lender and are unsatisfied with their response can contact the FOS. Between April and June this year there were 160 complaints to the FOS about payday loans, with 71% of them upheld in the customer’s favour. Customers can be entitled to refunds on loan payments, interest or charges, or compensation for inconvenience caused.

Citizen’s Advice have launched an online animation to help people get to grips with their rights around payday loans. It explains that payday lenders can’t take money from your account without you knowing, or put pressure on you to borrow more money. They will also be taking to twitter using the hashtag #paydaywatch as bureaux from around the country tweet about cases they are dealing with.