Guarantor Loans Surpass PPI by Generating Complaints to Financial Ombudsman
Secured loans have overtaken PPI as the most criticized product currently by the financial mediator.
A sign that the PPI scandal is finally coming to an end, for the first time since 2007, payment protection insurance was not the most criticized product in Financial Ombudsman Service data.
More than 10,000 complaints about secured loans were received between October and December 2020, compared to just over 300 complaints during the same period a year earlier.
With a guarantor loan, someone else, often a family member, promises to pay off the debt if the borrower is unable to do so.
In the last quarter, the mediation service also received more than 6,000 complaints about mortgage loans against 430 complaints in the same period a year earlier.
The most criticized issue in the last quarter was with people saying they could no longer afford the borrowing they had previously taken out and in some cases borrowing had never been affordable for them, said the mediator.
He added: “The rules and guidance regarding lending and supporting people in financial difficulty are well established – and we are actively engaging with lenders to ensure they are responding effectively and fairly to their clients’ concerns.”
The PPI is the biggest bad-selling scandal the mediation service has ever seen.
The deadline for complaining about the PPI to the companies involved was August 2019, although if customers were not satisfied with the response, they could always bring their complaint to the ombudsman after that date.
The mediation service received 6,679 PPI complaints between October and December 2020, compared to more than 41,500 complaints during the same period a year earlier.
The last time PPI wasn’t the most criticized product in quarterly data was in the third quarter of 2007, when credit cards drew the majority of criticism.
Caroline Wayman, Managing Director of the Mediation Service, said, “The Financial Mediation Service continues to help thousands of people per week who are unhappy with their financial service provider.
“For over a decade, our department has received an unprecedented number of complaints about PPI. As expected, after helping over two million people, we are now almost done with our work on PPI.
“Excluding PPI, new complaints are up over 55% from the same period last year, with more and more people seeking our help in resolving issues with financial firms.
“If you believe you have been treated unfairly by your supplier, you should contact the Financial Ombudsman Service and we will see if we can help you.”