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ombudsman urges people to confront their fears and speak up about payday loan debt

8 July 2014

The ombudsman has today urged people struggling with payday loans, or other debt worries, to confront the ‘shame factor’ and seek help. Though its figures reveal a record number of complaints, the ombudsman warns that this is likely to be only the tip of the iceberg.

The ombudsman announced:

  • complaints about payday loans have more than doubled in the last two years;
  • in two out of three cases payday lenders were told to put things right;
  • the most common cause for complaint was people saying they hadn’t taken out the loan;
  • people also raised concerns about poor service and administration, lenders not being willing to help those struggling to repay and aggressive debt collecting practices.

The ombudsman expressed concerns that far too many people struggling to repay payday loans felt powerless to make a complaint - and it encouraged them to speak up about their debt problems.

Sounding a warning to the industry over poor business practices the ombudsman called on lenders to take a positive approach when tackling customers’ concerns. It also said that disappointingly high numbers of people were unaware that they could speak to the ombudsman, if they felt they were not being treated fairly.

Principal ombudsman Caroline Wayman said:

We often hear from people who took out a payday loan as a desperate last resort and blame themselves when the debt starts to spiral out of control. It’s important that people don’t feel trapped with nowhere to turn because of the stigma associated with short-term lending.

Money problems can affect everyone - but the good news is that there is light at the end of the tunnel. If you have a problem with a payday loan, get in touch with the ombudsman straight away. We’ll contact the lender on your behalf and help to quickly get things sorted.

StepChange Chief Executive Mike O’Connor said:

The payday loan industry has been a problem for many years. Unaffordable lending, the misuse of continuous payments to drain money from customers’ accounts, the rolling over of loans and inflating debts with additional charges have been commonplace and damaging. The fact that most complaints against payday loan companies are upheld is further evidence that when it comes to acting in the best interests of consumers, in many cases they fail to do so.

We know that payday loans are often a last resort for people who are already in serious financial difficulty. We urge anyone struggling with any form of debt to get free and impartial debt advice at the earliest opportunity.

media enquiries

  • ombudsman press office - phone 0207 964 1234
  • StepChange news team - phone 020 7397 4598