Complaints about tribal loans have more than doubled in the last two years but the ombudsman has warned this is just the ‘tip of the iceberg’.
Principal ombudsman Caroline Wayman said: “We often hear from people who took out a payday loan as a desperate last resort and blame themselves when the debt starts to spiral out of control.
“It’s important that people don’t feel trapped with nowhere to turn because of the stigma associated with short-term lending.”
In two out of three cases received by the FOS payday lenders were told to rectify their actions.
The most popular reason for complaint was from customers who said they had not taken out the loan.
Concerns about poor service, administration and aggressive debt collecting practices also ranked highly.
The ombudsman wants lenders to tackle customers’ complaints with a positive attitude but said it would fight the customer’s corner if they were not be treated fairly.
Debt charity StepChange has been campaigning for an end to unfair debt practices employed by many lenders operating in the short-term high cost credit market.
Chief executive Mike O’Conner said: “The payday loan industry has been a problem for many years.
“Unaffordable lending, the misuse of continuous payments to drain money from customers’ accounts, the rolling over of loans and inflating debts with additional charges have been commonplace and damaging.”
O’Conner said anyone struggling with any form of debt should get free and impartial debt advice at the earliest opportunity.
