New statistics for July-December 2018 from the Financial Ombudsman (FOS) show how payday loan complaints have jumped in the second half of 2018 and give details for how many complaints the larger lenders had.
Almost all these cases are affordability complaints where a customer was given payday loans without proper affordability checks and is asking for a refund of interest paid.
The Ombudsman Annual Review in May 2019 said that payday loan complaints had gone up by 130% to about 40,000 in 2018-19.
QuickQuid – the most complained about lender in 2018
January – June 2018 statistics
In FOS figures for the first half of 2018:
- complaint numbers for QuickQuid have tripled since the last half of 2017
- Wonga’s complaints nearly doubled, forcing it to go into administration at the end of August
- other payday lenders such as Lending Stream, Sunny and Payday UK have also seen numbers of Ombudsman cases more than double in the last half year.
QuickQuid had the most complaints of any banking and credit firm (excluding PPI complaints which are treated as insurance complaints):
This jump has taken QuickQuid to be the most complained about banking and credit firm in Britain in 2018. Barclays had the next largest number of complaints and then Wonga.
This contrasts to the last half of 2017, when the big banks took the first five places, with Wonga coming in sixth and QuickQuid eighth.
Here are the worst firms for complaints, showing how the numbers of banking and credit complaints to the Ombudsman (this excludes PPI) have changed from the last half of 2017 to the first half of 2018:
|Jul-Dec 17||Jan-Jun 18|
July – December 2018 statistics
The new FOS data shows that in the last six months of 2018, QuickQuid’s complaint numbers rose even further to 5,717.
So during 2018 FOS was sent more than 10,000 complaints about QuickQuid.
And it was still at the top of the lender complaints table. Second and third were TSB – unsurprisingly after all their IT problems – and Barclays.
Then came more payday lenders.
Wonga is no longer high in the table for the second half of 2018 as no complaints were accepted by FOS after it went into administration at the end of August.
Payday loan complaints are often being upheld
Today’s statistics show that the Finanical Ombudsman is upholding a slightly smaller percentage of payday loan complaints than previously:
- QuickQuid’s uphold rate has dropped from 69% in the first half to 58%.
- Sunny’s has gone down slightly to 63% and Lending Stream’s to 60%.
I don’t think that FOS has got stricter. Nor do I think the payday lenders are settling good complaints directly with the customer.
I think these small falls are because in 2018 Claims Management Companies started sending some very weak complaints, some for only one loan, to FOS. It is these very weak cases that have brought the success rates for customers down. They may well continue to drop in 2019 for this reason.
These are still very high uphold rates – higher than for most other types of product the Ombudsman covers.
Payday lenders need to improve how they handle complaints
The current high levels of customer complaints being won at the Ombudsman suggest that the payday lenders have still not improved their complaints handling enough in the last year.
Lenders are continuing to reject or make poor offers to customers complaints even when they know similar cases are being upheld by the Ombudsman. This is not treating their customers fairly.
And some of these firms now have a large backlog of cases with FOS.
Lenders such as QuickQuid and Lending Stream need to reconsider the rejections or poor offers they made to some of their customers in the queue for FOS decisions. They should make new offers taking into account what they now know about FOS’s approach to handling loans over 6 years old, loans after 2015 and long chains of loans.