Financial ombudsman Susan Taylor said experience has shown that rising cost of living and interest rates translates to rising complaints about loans. Photo: 123RF
The number of people complaining about financial lenders has spiked as more people feel the economic strain.
The Financial Services Complaints arm of the Financial Ombudsman Service said the number of disputes the service formally investigated spiked by 37 percent in the past year, and the number of complaints increased by 25 percent.
Financial ombudsman Susan Taylor said non-bank lenders made up a large chunk of the complaints.
"Complaints about lenders made up the greatest proportion of complaints investigated," she said.
"The increase in complaints is reflective of the challenges in the wider economic environment.
"Experience shows that when interest rates and the cost of living increase, complaints about loans tend to go up."
The service received 1349 complaints, compared to 1077 in the previous year.
Of the 274 cases formally investigated, the largest proportion of complaints were about consumer credit products at 31 percent, followed by credit cards at 7 percent and mortgage loans at 6 percent.
"Access to effective dispute resolution plays a crucial part in maintaining confidence and consumers' trust in the financial organisations and advisers that they interact with on a regular basis, particularly when times are tough," Taylor said.
She warned consumers not to be tempted to chase big investment returns when times were tough.
"It can be tempting to look to get-rich-quick schemes when under financial pressure," she said.
"However, if an investment promises high returns, it likely carries a high level of risk."