The finance industry’s adjudicator has criticised the “unacceptable” behaviour of some payday lenders after a 130% rise in complaints, which it said goes beyond the practices of recently collapsed industry leader Wonga.

The Financial Ombudsman Service (FOS) said the surge contributed to a 14% rise in complaints across the financial sector, which reached a five-year high of 388,392 over the 12 months to March.

The rise in payday lending complaints more than offset a drop in PPI complaints, which accounted for fewer than half of new disputes for the first time in a decade, as the August deadline for claims looms.

Payday loans accounted for 39,715 of the new disputes, marking a 130% rise from a year earlier. The FOS annual report called it a “startling” rise and said the conduct in this sector “has been unacceptable”.

Caroline Wayman, the FOS’ chief ombudsman and chief executive, said: “Too often we see that the interests of consumers are not hardwired into financial services. The behaviour we’ve seen from some businesses is simply not good enough.”

But the FOS stressed that the rise was not solely attributed to Wonga, which was brought to its knees last August by a spike in disputes over excessive charges. Some of its historic loans came with interest rates that topped 5,000%.

The FOS annual report did not break down complaints about individual companies for the period. But figures released separately by the FOS that covered the 2018 calendar year showed CashEuroNet, which owns brands such as QuickQuid, Pounds to Pocket and On Stride, received the highest number of complaints at 10,409, compared with Wonga’s 6,876.

Loans are being offered to customers who may not be able to afford repayments. Some already have 10-15 payday loans they are struggling to repay, and in some cases the FOS has dealt with customers who held more than 100 payday loans at one time.

Wayman said: “The rise in payday complaints isn’t solely down to any one lender. We’re concerned that various businesses are failing in their duty to assess affordability of debt, and aren’t learning enough from the complaints we’ve resolved – and we’re hearing from more and more customers who’ve been left to struggle with unsustainable debt.”

The rise in complaints come despite the Financial Conduct Authority’s cap on payday loans charges, which came into force in 2015 and kept lenders from charging customers more in fees and interest than the amount borrowed.

Peter Tutton, head of policy at debt charity StepChange, said he had also seen a “small but worrying resurgence in clients with payday or similar loans”, with young customers starting to accumulate debt as a result.

“People often turn to this kind of borrowing when they don’t feel there’s any alternative. Public policy needs to support better alternatives and coping strategies,” he added. StepChange has been pushing for options including a no-interest loan scheme, which is being assessed by the Treasury.

The FOS annual report also highlighted a 40% rise in complaints about fraud and scams to 12,000, with authorised push payments one of the fastest-growing problems. Complaints about IT failures rose by 8% to 150,000.

Most complained about financial products complaints in the year to March 2019

1. PPI: 180,507

2. Current accounts: 41,069

3. Payday loans: 39,715

4. Credit cards: 13,940

5. Motor insurance: 12,977

6. Mortgages: 10,087

7. Hire purchase: 8,943

8. Unsecured loans: 6,806

9. Buildings insurance: 6,723

10. Instalment loans: 5,162