Complaints against non-bank lenders double amid cost of living crisis
Complaints about unsecured debt have more than doubled in the past year as consumers struggle to repay their loans in the face of rising living costs.
Dispute resolution service Financial Services Complaints said it was also receiving about 20 complaints a week against non-bank lenders – also doubled from 12 months ago.
The organization said it was the biggest increase since it began 11 years ago.
Chief executive Susan Taylor said the majority of complaints have come from people struggling to honor their payments.
“They want the lender to consider putting in place some sort of relief package for them. Sometimes underlying the hardship complaint there may also be a complaint that the loan was irresponsible in the first place.
“Some people may say that the lender should not have advanced this loan because [they were] always going to struggle to pay it back.”
But consumers have often complained because their circumstances have changed due to rising costs and reduced work hours, Taylor said.
She said if consumers are in trouble, they should speak to their lender as soon as possible.
“Borrowers should be aware that if the lender tries to contact them and they are late, it is better that they have those conversations sooner rather than later.
“We understand that it can be difficult to have these conversations, however, over time the options diminish and you don’t want to have to pay default charges and accrued interest, which will increase the longer it takes to solve the problem. publish.”
For lenders, Taylor said the Responsible Lending Code outlines the steps to take when borrowers are in trouble.
“For example, a borrower may call their lender to tell them that they unexpectedly lost their job and are struggling to meet their repayments.
“The lender should remind them that they can request changes to the amount of the repayment or the credit agreement, tell them what information the lender needs to assess the request and any time limits that may apply.”
Lenders had a responsibility to “watch out” for people they might see getting into trouble, Taylor said.