Huge controversy has surrounded payday lenders and their business practices in recent months – few people have made an official complaint to the ombudsman. Vicky Shaw reports

A FIGHT back campaign has been launched by the Citizens Advice Bureau (CAB), urging people who feel they have been mistreated by a payday lender not to let the firm get away with it.

The debt advice charity wants to see more people who feel they have suffered at the hands of lenders taking their complaint to the Financial Ombudsman Service (FOS).

While consumers should initially make a complaint directly to the lender, if it cannot be resolved they can then ask the ombudsman to step in.

The ombudsman can then help people to claw their money back when firms are found to be in the wrong.

Charities have reported being deluged with cries for help from people struggling with payday debt, including Stepchange, which said more than 7,000 people with five or more payday loans contacted it last year.

Yet, despite these numbers, the ombudsman is still seeing only about 40 to 50 complaints each month, and only 542 new complaints were made about payday lenders all of last year.

Consumer awareness about the ombudsman service has never been higher, thanks in part to the massive scale of the payment protection insurance (PPI) mis-selling scandal – it takes 2,000 calls a day from people about this.

So why is the ombudsman not seeing more complaints about payday lenders?

The answer is not really clear.

One possibility could be that some payday lenders are clearing problems up quickly when they receive an initial complaint from a customer.

Payday firms have been under the spotlight recently and there have been industry moves to drive up standards.

The Consumer Finance Association, which represents short-term lenders, recently launched a code of practice which members must abide by to improve customer protections.

Lenders are also encouraging struggling borrowers to seek debt advice.

The whole payday sector is under investigation by the Competition Commission, which has the power to shake up whole markets where it sees fit.

The commission is to give its findings next year.

Another explanation, from the ombudsman service’s own research, suggests some people are reluctant to admit to having taken out a payday loan.

They get calls from people who might have a highpowered job and appear asset rich to the outside world and do not want to admit to others that they have been embroiled in a secret financial struggle.

They may not have even told their wives or husbands they are having trouble with debt – but the service wants to reassure these people that it is there to offer help.

In other cases, it simply might not occur to some payday loan customers who are struggling that they could have grounds for a complaint.

People who are drowning in debt are, understandably, often very focused on their immediate money worries – but the CAB also wants them to consider whether they were treated fairly.

By speaking up, consumers will put more pressure on those in the industry who have behaved badly to change their ways.

Analysis by the CAB found that from the 665 cases brought to it by payday customers during the first half of this year, three quarters of borrowers would have grounds to take their complaint to the ombudsman.

One in five cases it looked at possibly involved fraud, where a person was apparently being chased for a loan they had never taken out.

One in eight involved allegations that lenders pestered customers with phone calls and texts rather than accepting offers of payment that were affordable.

With this in mind, if a payday loan customer does complain to the ombudsman, there is a high chance they will win their case.

More than seven in ten complaints made to the ombudsman about payday lenders are resolved in the consumer’s favour.

The lender can be ordered to put things right – which could mean consumers being refunded loan repayments, interest or default charges, or compensation for any inconvenience caused.