Caroline Wayman, the Chief Ombudsman at the Financial Ombudsman Service (FOS) gave evidence to the House of Commons Treasury Select Committee on 22 January 2019.
Here I am just picking out some of her remarks which are relevant to payday loan affordability complaints.
Complaint numbers
Wayman talked about “the unprecedented growth” in FOS complaints about payday lenders this year. This was detailed in FOS’s Strategy, Plans and Budget 2019/20 document in December:
A whistleblower had sent the Committee information saying there were 30,000 cases waiting to be allocated to an adjudicator and 8,000 cases waiting for an ombudsman-level decision. I think these referred to all general (ie not PPI) cases, not specifically payday loan cases.
Wayman said she thought they were roughly accurate but 3,000 of the 8,000 cases waiting for an Ombudsman decision were already being looked at by an Ombudsman.
Update: the Ombudsman’s final figures for 2018/19 showed that they received 40,000 complaints. See Payday lenders tired of having to pay so many refunds – unsurprising!
FOS’s approach to these large numbers of cases
Wayman emphasised that the answer to these high volumes was not simply to recruit more staff. She talked about “reducing demand in the right way” by getting payday lenders to apply the FOS approach to determining these complaints. This should prevent FOS being sent the sorts of clear cut cases it should not have to make a decision on.
This is also the approach the FCA advocated in its Dear CEO letter in October 2018.
Wayman acknowledged that it was important people had a result in a reasonable amount of time and said that they tried to prioritise vulnerable customers.
I would have liked her to be asked questions about why some payday loan cases are being allowed to drag on for very prolonged periods. For example, FOS has made clear rulings on the 6-year issue but so far QuickQuid appears to be ignoring these decisions.
Will these numbers continue?
In their proposed budget, FOS is planning for another 50,000 short term lending cases in 2019/20. Wayman said to the Committee
We don’t know how long [payday loan complaints] will persist as a major source of casework for us. Not least because some of the payday lenders are having difficulty in terms of their own solvency.
That last sentence was picked up and reported by Reuters. Although that sounds worrying for people waiting for decisions about their payday loan refunds, it may just reflect a general concern rather than knowledge of problems at some specific lenders.
Lenders were reminded by the FCA in the Dear CEO letter that:
We expect firms to make appropriate provision for any remediation which may be required, including associated costs (for example, fees to the Ombudsman). If doing so calls into question your firm’s ability both now and in the future to meet its financial commitments as they fall due, you must notify the FCA immediately.
The only lender that I know is in discussion with the FCA and FOS because of the cost of these complaints is Wageday Advance, which announced this in October. [Update – Wageday Advance asked the FCA for a Scheme of Arrangement in January 2019 but then when into Administration when the FCA did not agree to the Scheme.]
Ombudsman will look at loans over 6 years old
Refunds on QQ loans after 2015
How to ask for a payday loan refund
Richard Culley says
I wasn’t surprised to hear how bad things at the FOS are.
Wayman is awful she should be sacked.
Some lenders are going to go bust before they investigate or adjudicate complaints.
I have a case there awaiting allocation since 26th September when the business returned their final answer.
I’ve waited 8 weeks before then for final response.
Also I’m progressing a claim against money shop for a lot of money and I fear that they could go bust before the FOS gets to it.
Keith Pickering says
my payday loan claim been with the fos 12 months thats way to long
Katie says
Mine has been with them for around 14 months and has only just last month been put in a queue for ombudsman. They let the companys your complaining about have so much extra time to get back to them and then you have to keep contacting them to ask what’s going on.
Jane says
I am still awaiting an adjudicator to be assigned for my case against Green light Credit/Varooma, my case was accepted 18 Jan 2019. I have used the Ombudsman service before and have never had to wait longer than 3 months for an adjudicator to be assigned, why are some cases allowed to drag on causing incredible stress for the complainant and others dealt with reasonably quickly, it should be first come first served whatever the complaint is. Their excuse about huge backlog is just a smokescreen for bad management decisions as regards their work practices and man management, implementation of the Phoenix system seems to have made things worse, taking away specialists and making everyone handle all types of cases will lead to delays and indecision . The payday loan scandal and huge rise in claims could have been seen a mile away, late ineffective management decisions at the Financial Ombudsman to meet the extra workload a complete joke. All the financial businesses know the state the Financial Ombudsman are in and that they will not lose anything by immediately dismissing a valid customer complaint.and having the customer raise it with the Financial Ombudsman. Sharks win, win , win ! Customers lose, lose, lose!!
Mike says
Hi Sara.
Do you know of any reason that the FOS can’t give any form of time frame (even a vague one), of when a complaint will be addressed by adjudicator or Ombudsman?
If I was in a queueing system and could see I was number 89,487th in line to be addressed, then the following month I was 76,174th at least I could see progress was being made.
As it stands there is no transparency whatsoever and this is what many users of the service find most frustrating.
Sara (Debt Camel) says
Because it isnt a simple queuing system. I do understand the frustration. How long have you been waiting, who is the lender?
Mike says
Ive got 2 cases currently being investigated. Both long term loans. One with Creation Consumer Credit and the adjudicator agreed with them (10 months for adjudicator decision, in queue for ombudsman for 3 months as I asked for a Final Decision ).
The second is with Honeycomb finance. The adjudicator sided with me but the firm didn’t agree so same time frame with the second.