The Financial Ombudsman Service (FOS) has published a report following its review of complaints relating to payday loans. Some of the issues contained in the report included complaints about fraud, payday loans, damage to credit records, debt-chasing, poor administration and customer service, high costs and charges, informing consumers of their referral rights, continuous payment authorities and the experience of vulnerable consumers. In order to tackle this, the FOS suggests the following remedies:

• end poor administration. The FOS is concerned that firms are causing their customers undue trouble and upset because of poor systems and processes. It also notes that putting resources into improving this area will reap rewards in customer satisfaction;
• make customers central to the business. The key is listening to what the customers want and trying to put things right early.  The FOS highlights that the FCA will tackle notable abuses of the system;
• ensure that customers know their rights. Referral rights are not being provided consistently by firms and the standards in final response letters need to be raised. Any poor practice will continue to be flagged by the FOS to the FCA;
• help vulnerable customers. The FOS recognises that consumers are still not being treated fairly, not being heard and that lenders are taking advantage of them. It encourages lenders to work together with consumers to find solutions, such as debt repayment plans rather than ignoring the problem and continuing to chase for debt. The rise of complaints in relation to credit brokers has also been noted. The FOS highlights that these issues are firmly on the FCA’s radar; and
• work with credit reference agencies to ensure that customers’ credit files are accessible, transparent and easy to understand. Though the FOS acknowledges that this is a wider issue for the industry beyond payday lending.

View Financial Ombudsman Service insight report: payday lending: pieces of the picture, 19 August 2014