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Britain’s debt problems revealed: credit complaints soar by 90%

Mobile phone cover and debit card gripes also rise, according to ombudsman

Complaints

Complaints about debts and payday loans have rocketed over the past year, as Brits increasingly rely on credit to finance their spending, the Financial Ombudsman Service has warned.

Complaints against payday loan companies are up by a huge 230% over the year, and almost two out of every three regard being unfairly rejected for a payday loan.

Problems with all consumer credit are up by 90% in total, with just under one in two complaints upheld on behalf of consumers.

In its review of the year, the Ombudsman highlighted that ‘people have much more access to credit and are purchasing a lot more products on finance’. According to the Bank of England, the level of household debt on credit cards – now £68bn – has hit an all time high.

Payday loan complaints skyrocket

Over 2016-17, payday loan complaints leaped from 3,216 to 10,529. The Ombudsman stated that this could reflect ‘growing awareness among payday customers of their right to complain if they’ve been treated unfairly, following well-publicised action by the FCA against some payday lenders.’

Other complaints about debt companies included high and unaffordable interest rates, excessive costs and lenders taking money without permission. In addition, some people were stung after taking out products they were told would boost their credit rating – but in fact damaged it.

Extended warranty and mobile phone cover complaints on the up

It’s not just debt that’s been ticking off British consumers. The Ombudsman reported a 53% increase in complaints about debit and cash cards, as well as mobile phone insurance.

Problems with contactless cards have hit the headlines recently, with fraudulent use rising by 150% over the past year.

Complaints about extended warranties on electrical items have also risen, up by more than 40% between April 2016 and 2017.

What is the Financial Ombudsman Service?

The Financial Ombudsman Service is a free, independent service for settling disputes between financial providers and their customers, including complaints about bank accounts, investment products, mortgages and loans.

In the past financial year, it handled 1.4m enquiries – almost 4,000 per day – and took on a total 321,283 new complaints about financial services or products.

How do I make a complaint to the Ombudsman?

There are four steps to take if you want to make a complaint about a financial services company.

  1. Complain to the company – take your complaint directly to the firm. It will then have eight weeks to resolve your complaint.
  2. The ‘letter of deadlock’ – ask for a ‘letter of deadlock if the company has refused to uphold your complaint. Do this in writing, and then take your complaint to the Financial Ombudsman Service within six months of receipt.
  3. Contact the Ombudsman – you can find its complaint form online here, or call on 0800 023 4567 or 0300 123 9 123.
  4. Awaiting its decision – the Ombudsman will look at the evidence and issue a decision in writing, which will also outline any compensation you might be due if your complaint is successful.

You can find out more about making a financial complaint on our free Consumer Rights website.

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