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If you live in Scotland and are struggling with your debts then an investigating into payday loans highlights that a Scottish Trust Deed will help you manage your debts.

The team at Scotland’s Trust Deed has always strongly encouraged our customers not to fall into a high-interest rate trap when applying for payday loans – and it’s sad to hear that official figures have reported a 130% rise in the number of complaints about payday loans last year.

The Financial Ombudsman has collated a report which states that between 2018 and 2019 there were 40,000 complaints made and most of these were about the affordability of the loans.

Debt management companies acting for their customers were the source of many of the complaints. It’s likely that the people they represent have turned to a payday loan company in desperation only to find themselves, very quickly, saddled with even more expensive debt.

The chief executive of the Financial Ombudsman Service, Caroline Wayman, said: “Too often we see that the interests of consumers are not hard-wired into financial services.”

Five-year high in the number of complaints

She said that financial services companies become so focused on the profits they can make that ‘they forget the moral obligation’ they have towards their customers. The five-year high in the number of complaints reported by the Ombudsman is proof that the problem is getting worse.

Ms Wayman said of the 14% increase in complaints from 2018-2019: “The behaviour we’ve seen from some businesses is simply not good enough.”

In defence of the short-term lending companies at the centre of the complaints, a spokeswoman from the Consumer Finance Association declared that the issues stemmed from the years before changes in regulation. She called the rise in complaints “disappointing” but that they were of “poor quality” and “had no foundation”.

Citizens Advice Scotland admitted that the biggest problems with payday loans were helped by the Financial Conduct Authority’s 2014 price cap and regulations. However, there are still clearly big issues which are causing misery and hardship for thousands of customers.

The charity suggests that the market is not operating fairly and ‘perhaps tighter regulation is needed.’

Scotland’s Trust Deed believes affordable credit options are needed

At Scotland’s Trust Deed we believe that affordable credit options are needed so that people can borrow without getting into a financial struggle. Advice and full explanations should be an intrinsic part of the borrowing process so that people understand what they are agreeing to.

The people who most need access to a fair and flexible lender such as a bank or building society are usually the people that are turned down by them. The reasons for the rejection of these loan applications are sound and based on affordability and responsible lending.

However, this doesn’t negate the fact that the loan is still needed by that individual. In desperation, they turn to unscrupulous loan companies who offer high-interest options that quickly become unaffordable.

Scotland’s Trust Deed has many years of experience with helping people who have found themselves in financial trouble. Debt advice and support are an important part of our service and we believe this ethos should be replicated in every area of the financial services industry.

If you need to discuss your debt problems then contact Scotland’s Trust Deed today.