Ahead of the Financial Conduct Authority’s (FCA) high-cost credit review, figures show the financial ombudsman has received a record number of complaints about store cards, credit cards and payday loans.
The number of complaints the ombudsman received about consumer credit products and services – including store cards, credit cards and payday loans – rose 40 percent in 2017-18 to 36,300. More than a third of these complaints were upheld by the ombudsman.
The report comes just a day before a major review of high-cost credit by the Financial Conduct Authority (FCA). Excluding payment protection insurance (PPI), around one in four complaints to the FOS were about consumer credit.
The FOS said it received 17,256 complaints about payday loans, with 61 percent of those complaints upheld. Complaints about home credit also rose sharply, increasing 146 percent.
Meanwhile, grievances over high-cost instalment loans were upheld in 58 percent of cases. Those cases were often existing debts that were refinanced and then repaid over a longer period.
Caroline Wayman, chief ombudsman, said: "People buy a whole range of things on credit - from everyday household appliances to a car - and in many cases it is manageable and affordable.
"For some people, borrowing may be a necessity rather than a choice. There can be a very fine line between getting by and going under. Even people who seem to be on top of their finances can quickly become vulnerable."