FOS resolves just 33% of payday loan complaints

Since the start of 2018, the Financial Ombudsman Service (FOS) has received 47,220 complaints in relation to payday loan providers, though only 16,940 have been resolved.

A freedom of information (FOI) request from Wagestream revealed that the FOS is being overwhelmed with consumer complaints over issues with payday loan lenders but, going by the trend seen over the last five years, those complainants have just a 58 per cent chance of winning.

When looking at 2019 alone, the resolution figure is slightly higher. So far this year, 7,451 complaints have been received by the FOS about payday lenders, with 3,950 having been resolved.

The payday lending industry has received huge scrutiny in recent years, especially after the collapse of payday loan giant, Wonga, which went into administration in August 2018. The Financial Conduct Authority (FCA) introduced a cap on fees and interest of 0.8 per cent per day on the amount borrowed in 2015 and has since extended the initiative to 2020.

Commenting on the information, Wagestream CEO and co-founder Peter Briffett said: “The introduction of a fees and interest cap has improved life for borrowers but, at a basic level, this type of lending remains extortionate and exploitative.

“Consumers are clearly having issues with payday loan providers around the service they are receiving. The financial stress caused by the monthly pay cycle is what normally drives people into the arms of payday lenders and this is what employers should look at to help staff avoid this debt trap and help keep families out of in-work poverty.

“The payday loans industry remains the first point of call for vulnerable borrowers with poor credit scores. If we can replace the antiquated monthly pay cycle with something better, then the need for payday loans will largely disappear.”

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