The recent popularity of crowdfunding and peer-to-peer lending has not yet resulted in a significant number of complaints to FOS.
From July to September PPI remained the most complained about financial product, with 42,907 new cases (54%). Packaged bank accounts were second on the list, with 5,317 new cases.
However, chief ombudsman and FOS chief executive Caroline Wayma, said: “It isn’t just the big numbers that matter. In fact, although our data is usually dominated by a few products and a few providers, the smaller numbers can provide some of the most interesting insight into what’s going on in financial services. We’ve just got to ask the right questions.
For example, in areas where we receive few or no complaints, are businesses generally very good at treating customers fairly – or is it that those customers are less aware of the ombudsman? Do low but growing volumes of complaints indicate an emerging problem – or simply that a product or sector is growing in size or popularity?”
Wayman said that, compared with the recent level of interest around peer-to-peer loans and investments, the low level of complaints was encouraging. She added: “On the other hand, we’ve identified a few areas where we think it would be helpful to share our insight.”
FOS said there have been more complaints about loan-based crowdfunding – or peer-to-peer lending – than about investment-based crowdfunding.
In a number of cases, consumers said they weren’t aware they’d borrowed money under a peer-to-peer arrangement. There have also been complaints about goods and services bought with peer-to-peer loans – with some borrowers unsure about the recourse they have to the lender, compared with different types of credit they’ve used in the past.
FOS added that there have been a small number of complaints about charges arising on peer-to-peer loans when borrowers repay early.
In one example, an investor used a crowdfunding platform to invest £50,000 in mortgage loans but a year later the platform decided not to deal with ‘retail’ investors for longer-term investments such as mortgages. The platform said it would return the money with interest but as they were still working to remortgage a number of the loans they would initially return 80%, with the remaining 20% to be repaid within a year. The investor complained that he wanted his money back immediately, but FOS found the platform was reasonable in its actions.
To read further case studies relating to peer-to-peer lending visit the FOS website.