Consumer Credit’s Elephant Sized Problem!

Sarah Lawrence

Sarah Lawrence

Sarah has spent over 20 years of experience in the financial services industry, including over 16 years working at the Financial Ombudsman Service. Sarah specialises in customer service and complaints handling, with extensive experience of management and mediating complaints and is dedicated to passing on her knowledge and experience to businesses to improve complaints handling, customer service and consumers’ perceptions of the industry.

I don’t think it’s any coincidence that I’m sat here writing a blog all about consumer credit and the complaints landscape for 2021. It’s something I’ve been talking at length about, for a considerable time, because there’s an elephant sized issue looming large over the consumer credit sector. I can see it, I’m sure the industry can see it, but we don’t seem to be talking about it.

So, strap yourself in, because I’m about to address that elephant – the Financial Ombudsman Service is getting increasingly exasperated with this part of the industry. And here’s why, consumer credit complaints make up the biggest share of their complaints, second only to PPI! Its own figures show that 3 in 10 of the complaints it sees are consumer credit, over 46,000 in its last annual report! A huge slice of the complaints pie.

This means too many complaints are being made about consumer credit in the first place, and too high a proportion are making their way to the Ombudsman Service. Reading between those lines, this means the complaints are not being looked at properly, are not being resolved at the front-end of the process, or worse, consumers are simply by-passing the business completely to go straight to the FOS.


Consumer Credit Complaints

All very unwelcome, but that’s not all, because coupled with these high numbers are a very, high uphold rate. This Is particularly the case in some areas within consumer credit, notably lending.

Let me list some of these for you to get an idea of the extent of the issue. These are uphold rates for different areas of lending:

  • A staggering 89% for guarantor loans
  • An equally mind-boggling 84% for home loans
  • An eye-watering 79% for log book loans
  • Instalment and point of sale lending aren’t slouching either on 74%

Now, here’s the thing, if the ombudsman has an uphold rate over roughly 40%, then there’s a bit of an issue. The issue could be the product itself. e.g. payday loans, how that business or section of the industry looks at complaints, or perhaps, as in this instance, how the industry is doing something that fundamentally flies in the face of fair and reasonable. And this industry has a huge issue with assessing affordability.

But, before you think there is nothing you can do about this, I want to reassure you, there is plenty you can do:

  1. Root Causes: Look at the trends in your own complaints. What are you seeing from your own customers and what does it tell you about your own processes? For example, is It the sale, the administering of the loan or even the debt collection? Your complaints will tell you what your key issues are.
  1. Outcomes: Are you getting your complaints outcomes right? How many are making their way to the Ombudsman and how many are being overturned? If the answer to either of these is ‘too many to be comfortable’, then there’s something that needs to be addressed sooner rather than later.

It’s certainly time to look at your Final Response Letters, your outcomes and whether staff are getting it right, because something isn’t working there.   

And, if you’re not tracking these trends properly then it’s time to start doing that, because it’s not just a regulatory requirement, it’s something that the FCA want to see more of in time, as they start to push the regulatory change mandate that was set out in last year’s Business Plan.

Consumer Credit Complaints


RegTech is a relatively new word but one that is key to the long-term success of managing compliance issues, complaints included, in the future. Regtech is the collective name, used by the FCA, to describe software solutions that manage compliance related processes more effectively, so increasing the probability of firms’ complying with the regulation, and at a lower cost.

Worksmart has picked up the ACQ ‘Complaints Management Solutions Provider of the Year’ award for the last two years for their complaints and feedback management system, Caresmart.

Two of the key features available in Caresmart directly address two of the key points mentioned above:

Root Causes: Caresmart allows for high-level and granular Root Cause Analysis (RCA), specifically:

  • Statistical and trend analysis.
  • Recording and tracking learning opportunities.
  • Analysing remedial actions taken to rectify RCA issues against new complaint types being received.

Outcomes: Caresmart allows a case handler, prior to complaint resolution, to see:

  • Similar cases that have been resolved.
  • What the firm’s original outcomes were and whether those cases then escalated to the Financial Services Ombudsman (FOS).
  • Details of the Ombudsman’s decision and whether the firm’s original decision was overturned.

Look out for more on this important topic later in the series. 

In the meantime, if you would like to know more about how Caresmart could help transform your complaints processes,  contact our friendly and knowledgeable team on: 01908 613613 or email us on:




Latest Blogs