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ombudsman news

issue 141

August 2017

where credit’s due

Credit – how much of it there is, and who’s using it – is rarely out of the news at the moment. In this light – and with official figures showing how significantly this area has expanded – it’s not surprising we’ve heard from growing numbers of people who’ve taken out loans or finance. Our annual review, published earlier in the summer, showed complaints about consumer credit rising by 89% in the year to April 2017, following a 40% rise in the year before that.

Of course, using credit can mean people have useful protection if things go wrong – including the option of asking for our help in putting things right. As our case studies highlight, some people contact us after things they’ve got on finance break down – and they’re left dealing with the knock-on effects. Other complaints – such as disputes over car finance – often stem from issues with communication or administration.

The FCA’s recent research into high-cost short-term credit suggests its tougher rules have made a difference. Overall, it seems fewer people are using this type of borrowing – with no significant evidence of a “waterbed” effect, or of a rise in illegal money lending. And debt charities report that fewer people are coming to them for help specifically with problems relating to high-cost short-term credit. In our annual review, we explained that, while we’d seen a rise in complaints about payday loans, many involved issues that arose in the past. More complaints might also reflect a growing confidence to come forward, following high-profile regulatory action.

Even so, there’s still work to do. Although not every credit complaint is about trouble with debt, we’ve continued to hear from people who are struggling. As preferences change – for example, from payday loans to instalment loans – we’ve seen that lenders still aren’t always making the right call in checking people will be able to repay what they owe.

The Bank of England has given lenders a clear warning against complacency. And the FCA has pointed to a number of concerns – including the cost of overdrafts – that it will take steps to address. As the picture continues to develop, we’ll keep on sharing what we’re seeing.

Caroline Wayman

Image: Caroline Wayman
Caroline Wayman
chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.