CFA responds to Financial Ombudsman Service

Responding to the Financial Ombudsman Service review, Hamblin-Boone, Consumer Finance Association CEO said:

“We are disappointed to see a rise in the numbers of payday lending complaints following the improvements the sector has made. Any rise is concerning to our members, but the increase to 3,216 complaints is less than 1 per cent of all complaints to the ombudsman and only 0.1 per cent of all payday customers. Our evidence is that the vast majority of these complaints are historic and some of them have been generated by increased activity from claims management companies (CMCs) and consumer finance sites. In some cases we have seen claims from customers who have never taken a loan, the numbers of loans exaggerated and incorrect details submitted.

The majority of these complaints have come from three CMC’s in particular, one of which has now been shut down and the CFA has reported the others to the regulator. Although these figures are low, CFA members continue to raise standards and reduce future complaints.

“Anyone with a genuine complaint should contact their lender directly for their claim to be reviewed and processed, there is no need to pay a claims management company. For most people if you are entitled to compensation your lender will contact you directly. CMCs are misleading people about the likelihood of a successful claim for loans taken several years ago.

These companies will be controlled by forthcoming regulation, but until then the Ombudsman needs to provide clear information to consumers, protect people from unnecessary fees and help improve CMC practice.”