A total of 2,828 people turned to CAB for help with problems connected to the instant cash loans, according to a comprehensive report into the complaints.
Short-term, instant loans have become big business over the past few years – fuelled by the recession, squeezed household budgets and the advent of internet and text message marketing. Some companies charge as much as 4,000 per cent interest on so-called “payday” loans, which can be taken out within minutes by filling in an online form.
Such services have been heavily criticised for encouraging people to take out loans which they would struggle to pay back. Glasgow City Council revealed last week that 100,000 people in Scotland’s biggest city are using payday loans and other types of “problem” lenders to raise cash.
“Last year we helped Scottish consumers solve over 200,000 problems, from getting refunds for faulty sofas to enforcing their rights when buying a car,” said Sarah Beattie-Smith, spokeswoman for Citizens Advice Scotland (CAS). All of their experiences help to inform us about the problems they face, so we can fight for their rights at a local and national level. One particularly worrying area where a growing number of people ask the CAB Service for help is around payday loans. We have seen a lot of irresponsible lending, often at extortionate rates, which has led many families into the misery of unmanageable debt.”
The top issue which was dealt with by bureaux for nearly 13,000 people were problems paying back credit card debt, while the number of people trying to tackle a problem related to holidays fell.
“While most general consumer goods and services issues remained stable over the year, the numbers of people seeking help with issues around holidays and travel fell, with package holiday issues dropping by 29 per cent,” the report said.
“Insurance issues also fell throughout the year, perhaps indicating improvements in the industry or simply a drop in the number of people taking out insurance.”
Problems with leather furniture, which has featured strongly in CAS complaints in previous years, remained strong over the past 12 months, generating 423 complaints – 156 per cent more of the total complaints than in the rest of the UK. However, the proportion of complaints relating to advertising agencies was 69 per cent lower than elsewhere in Britain, while the number of problems with landlords showed a similar difference.
“Far fewer consumers in Scotland contacted the consumer service about landlords and letting agents than their counterparts in the rest of Great Britain,” said the report. “There may be higher levels of complaints about letting agents in England than there are in Scotland due to differences in housing stock and the legislative landscape for housing across Great Britain.”