Consumer credit complaints soar to raise worries over a squeeze

Fears over a squeeze on cash-strapped consumers rose again on Tuesday as it emerged complaints about risky payday loans, hire-purchase agreements and other forms of consumer credit have leapt.

The Financial Ombudsman Service said consumer complaints spiked to 7281 in the three months to June, compared with 5846 in the same period last year.

It follows a steep increase in complaints to the ombudsman in the financial year to the end of April 2017.

Complaints about consumer credit products were 89% higher than they were in the year ending in 2016.

The FOS said many consumers were struggling with debt as lenders failed to make adequate checks that loans were affordable.

“Lenders still aren’t always making the right call in checking people will be able to repay what they owe,” chief ombudsman Caroline Wayman said, in the FOS’s latest quarterly report.

Payday loans account for half of the complaints made by consumers. However, Payment Protection Insurance remains the most complained about financial product.

High Street lender and pawnbroker H&T said today its loans business was booming, up almost 88% on last year.