News Column

Personal finance: Why do so few complain about payday lenders, wonders Patrick Collinson

July 8, 2014

Patrick Collinson



How many people complained to the Financial Ombudsman about payment protection insurance last year? A total of 399,939, adding to the millions of cases it has handled.

How many complained about payday lenders, such as Wonga or The Money Shop? A total of 794, double the level of the year before but still just a tiny fraction of the PPI cases. Even the principal ombudsman, Caroline Wayman, is scratching her head as to why there are so few such complaints.

Maybe it's because people struggling to repay payday loans feel powerless to make a complaint. Maybe they are not being told about their right to complain. Maybe, even, the likes of Wonga handle complaints so efficiently that they don't end up at the ombudsman's door.

Or maybe, more realistically, most borrowers feel that it's just not worth it. The rate of interest on Wonga loans is equal to 5,853%, but the average loan size just tops pounds 250. If a borrower pursues a case through the lender first, reaches deadlock, then takes it through to the ombudsman, even if he or she wins the case, the payout will be far short of the thousands others are picking up from PPI complaints.

Perhaps the number of complaints an ombudsman receives is a function of the number of ambulance-chasing claims companies that are able to feast on a 25%-40% cut of the winnings. Or perhaps the other inconvenient truth is that complaining is a rather more middle-income, middle-aged affair than many of us are willing to admit.



For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Guardian (UK)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters