MILLIONS of people who have taken out payday loans could be on hold.
A growing number of people are complaining about unaffordable loans or unfair fees imposed on them by payday lenders and the majority of those who do earn – sometimes thousands of pounds.
In one case seen by The Sun Online, the client was able to recover £ 10,300 in interest and fees on 40 payday loans taken out from three providers.
And there could be millions more who can claim refunds, depending on Money magazine.
Personal Finance Magazine covered the topic in its latest issue to highlight how people can get money back from lenders who broke the rules.
The number of people complaining about payday loans is increasing at an alarming rate.
The Financial Ombudsman Service (FOS) reports a 245% increase in the first half of this year, compared to the end of 2015.
He told The Sun Online that the majority of complaints he receives are from people who claim their loans are unaffordable.
In the example used in Moneywise magazine, the reader, who wished to remain anonymous, started taking payday loans in 2011, but it quickly got out of hand and he found himself borrowing money to pay off his loan. ‘other loans.
He complained directly to each company, via Resolver.co.uk, a free complaints management tool, but was not happy with the amount initially offered to him by one of the companies.
After reporting the problem to the Financial Ombudsman Service (FOS), the latter ruled in his favor and the money was refunded. The loans were also removed from his credit report.
Since 2014, the rules for payday lenders have been much tougher. Companies should conduct audits to assess the ability of customers to repay their loans and the impact of their underwriting on their financial situation.
As of January of last year, payday lenders have had to ensure that borrowers never pay back more in fees and interest than the amount borrowed – this is called a price cap.
The government’s watchdog, the Financial Conduct Authority, has also forced some payday lenders to automatically offer cash back to clients it has treated unfairly.
Earlier this year he ordered CFO Lending to pay over £ 34million to 97,000 clients.
In June 2014, he asked Wonga – the UK’s largest payday lender – to pay around £ 2.6million to around 45,000 clients, after discovering they had used debt collection practices unfair and deceptive.
How do you file a complaint against a payday lender?
If you think a lender hasn’t done proper affordability checks or you’ve been charged excessive fees, you could have a case.
Start by complaining directly to the company concerned. Claim reimbursement of all the interest and fees you paid on the unaffordable loan, plus interest.
You can also request that the loan be removed from your credit report if it is there, as this could affect your chances of getting credit in the future.
If you don’t get a response within eight weeks or if you are not satisfied with their response, you can take your case to the FOS. He will independently review your complaint and make a decision about it.
You should be able to get back all the interest you paid on any unaffordable loan, plus excessive fees.
You can always complain if you are repaying your loan, within six years of taking out it or within three years of learning about the problem. For more information on how to make a complaint see the FCA website.
The retention rate – where the Ombudsman rules in favor of consumers – for payday loans, was above the average for all financial products in the first six months of the year, at 53 percent from 48 percent.
Russell Hamblin-Boone, chief executive of the Consumer Finance Association (CFA), which represents the largest share of short-term lenders in the UK, said the vast majority of payday loan complaints are historical.
A spokesperson for the Ombudsman said: “When reviewing these complaints, we would consider whether the lender has carried out appropriate affordability checks.
“If the checks have not been carried out, that does not mean that we automatically accept a complaint. We would then seek to assess whether the loan would have been deemed affordable, if these verifications had been carried out.
He added that each case would be assessed based on individual circumstances.
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