Debt Hacker featured in The Financial Times
The Financial Times’ Claer Barrett and Nicholas Megaw report on how Debt Hacker’s payday loans complaints tool helps people complaint to payday lenders. Read the original article or find an extract below.
Activists are targeting short and medium-term lenders with a campaign of complaints that they hope will threaten “the very existence of the high-cost lending industry” after last week’s collapse of Wonga, the most high-profile company in the sector.
An influx of compensation claims over historic loans drove Wonga into administration on Thursday. A recently formed non-profit group called Debt Hacker is launching a payday loans complaints tool to help consumers submit similar complaints about other lenders.
Alan Campbell, a former financial services professional who is funding Debt Hacker’s set-up costs, said:
“If just 100,000 people complain to the FOS about how they were treated, it would cost the payday lenders £55m alone, win or lose”.
Mr Campbell described the liability as “asbestosis for the finance industry”.
“There are, after all, 8.3 million people burdened with over indebtedness through unaffordable lending. It’s massive.”
The Financial Ombudsman Service received about 11,000 complaints regarding payday loans in the three months to June, and the figure has been climbing rapidly over recent months due to a surge in activity and advertising by claims management companies.
Industry experts forecast that the most vulnerable firms would be other companies such as Wonga that have been in the market a long time, as newer entrants have designed their models around new affordability checks.
Hundreds of payday lenders have already stopped operating since the Financial Conduct Authority introduced stricter rules in 2015.