Exclusive: Payday loans epidemic in Yorkshire as complaints soar

Some of the complainants had taken out as many as 20 payday loans, the ombudsman confirmed, but it is hoped that tougher regulations will reduce the number of victims. Complaints about payday lending around the UK increased by around a fifth during 2016 to around 5,100 complaints.

In the last six months of last year, the financial ombudsman received around 380 payday lending complaints from Yorkshire, which is up by more than a third (36 per cent) when compared with the first half of last year.

Sixty per cent of the total payday lending complaints from Yorkshire and the Humber came from West Yorkshire. Payday lending complaints came from a wide variety of people, ranging from nurses and teachers to engineers and business analysts.

“Most of the complaints we receive involving payday loans are about affordability - and a consumer coming to us with 10-20 loans is a typical example of a two-year ‘relationship’ with a payday lender,’’ a spokesman for the Financial Ombudsman said.

Caroline Wayman, the chief ombudsman and chief executive at the Financial Ombudsman. said: “We certainly see quite a number of cases where people have had 10, 12 sometimes even more multiple payday loans, one after the other.

“It can be very difficult for people to break out of that cycle,’’

she added. “Sometimes what we will also look to do is put people in touch with debt charities in order to help them get back on their feet.

“A lot of people tell us they feel embarrassed and they feel ashamed, so it’s really important to try and help people feel comfortable talking about it.

“One of the key areas we are seeing now, is issues around whether the payday loan was affordable in the first place. It’s primarily about things that have happened a few years ago, it’s not necessarily about the payday loans people are taking out today.

“The FCA (Financial Conduct Authority) put in some new rules, and hopefully we will see improvement as a result of that.”

In April 2014, the FCA put the spotlight on higher risk products, such as payday loans, when it took over responsibility for consumer credit regulation.

Around 800,000 fewer people took out a payday loan over the following 18 months. There has been a 20 per cent drop in the the number of approvals for payday loans since April 2014, according to the FCA.

Ms Wayman said that as well as the cycle of payday loans, some people will have other debts like overdrafts, and credit card debt.

“So proper checks have not been done,’’ Ms wayman said. “They were being lent money that really they should never have been given in the first place.

“It can be very distressing. In some of the cases, there’s really no doubt that people haven’t been treated fairly.”

In these cases the financial ombudsman can make awards against the payday lender. These awards put people back in the position they should have been in, if they hadn’t been effectively mis-sold a payday loan, Ms Wayman said.

She added: “The tougher rules that have been brought in should mean that we see some real improvements. It’s about trying to help people feel comfortable. It’s really OK to phone up and say, ‘I don’t think it was fair.

“It’s not court; you don’t have to turn up with your ‘heads of claim’,you don’t have to write a fancy letter. Tell us your story and we will do the rest.”