LONDON (Reuters) – Complaints about loans guaranteed by companies like Amigo soared last year, eclipsing grievances over payment protection insurance (PPI) that have dominated for more than a decade, the UK Financial Ombudsman Service (FOS) said on Wednesday.
Consumers have turned to loan providers since last March as lockdowns to tackle the COVID-19 pandemic have strained their finances.
“For more than a decade, the Financial Ombudsman Service has received an unprecedented number of PPI complaints. We are now seeing thousands of additional credit complaints, including secured loans, ”FOS said in a statement.
Secured loans require a friend or family member to guarantee that they will take care of the repayments if the borrower falls behind. Complaints about this type of loan reached more than 10,000 from October to December, up from just over 300 during the same period a year earlier, the FOS said.
Complaints about other types of mortgage loans increased from 430 to over 6,000 during the same period.
Consumer loan complaints typically focused on inadequate affordability controls, FOS said.
Amigo describes itself as the UK leader in secured loans. The FOS said complaints about the company stood at 12,854 in the second half of 2020, up from 1,163 in the first half.
Amigo said he launched a plan of arrangement, or a court-approved compensation process, in January after receiving a high number of complaints last year.
“We are a new management team who want to correct the mistakes of the past in a way that is fair and equitable for all of our clients, including our 700,000 former borrowers and guarantors,” Amigo said in a statement.
Provident Personal Credit Ltd was the second most criticized company, with 10,390 complaints in the second half of 2020, FOS said. Provident did not comment.
The PPI became Britain’s costliest retail financial scandal that dominated the work of the FOS until the complaint deadline passed in August 2019.
Reporting by Huw Jones; edited by Barbara Lewis