Loan complaints drop by more than 50pc

The number of complaints about loans and other types of finance has dropped by over 50 per cent year-on-year, research has revealed.

Resolver’s first annual data report into 900,000 complaints made over the last year has shown that consumers lodged 56,205 complaints on loans and finance from April 2020 to March 2021, down 51.4 per cent from 115,740 complaints from April 2019 to March 2020.

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The free complaints service found that regulated products including banking, loans, energy and broadband saw complaint volumes slide over the year.

Similarly, there were 733 complaints on credit ratings in the year from April 2020 to March 2021, down by 22.2 per cent year-on-year.

Resolver found that finance providers were among those that responded immediately to Covid’s impact on consumers, for example, by offering payment holidays, but many customers were unaware that interest charges still applied throughout the duration of their payment breaks.

The firm also saw more than 46,000 cases in the finance sector concerning mis-selling in 2020/21, split broadly between packaged bank accounts and loans.

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More than 20,000 complaints concerned a mis-sold loan, more than a third of the total complaints made about loans in 2020/21. These overwhelmingly concerned short-term and payday loans.

Fraud-related claims and complaints were up across the finance sector compared to 2019/2020, with most services seeing a rise of more than 10 per cent.

Where the complaint concerned consumers being defrauded by another business, they fell into two main categories – identity-related issues where accounts were opened fraudulently and those either reporting or falling victim to scams.

While many cases concerned consumers asking their provider for help or to get their money back, Resolver found a worrying number of customers were having trouble contacting fraud helplines or being refused help.

Almost one in five fraud cases raised to finance companies were escalated to the Financial Ombudsman Service. Resolver predicted a rise in the number of fraud complaints.

The company said it is also seeing concerns that credit reports are being affected inadvertently, despite regulation preventing providers to report payment holidays to credit reference agencies.

Meanwhile, buy-now-pay-later credit arrangements saw more than 8,500 complaints in 2020/21. More than a fifth of these concerned excessive fees, incorrect charges and payment and repayment issues.

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“Resolver’s annual data serves as a timely reminder that behind every statistic and trend, there are real people, whose lives are fundamentally affected by the way businesses and other organisations deal with their complaints, from processes to communication channels,” said Alex Neill, chief executive of Resolver.

“The way complaints are handled significantly affects people’s lives and has a big impact on how we feel about a brand.

“What I have been struck by this year from our data is just how difficult it can be to simply get in touch with a business to lodge a complaint, and then to get an appropriate, timely resolution.”