For the past few years there has been a lot of press, mostly negative, about payday loans and payday lenders.
Payday loans were a way for someone who has weak, poor, or no credit to get a short-term loan. Short-term in the sense of the loan is until the borrower’s next payday.
To qualify for these types of bad credit loans, you just need a job, and a bank account.
Since they are risky loans, and short-term, the APR or annual percentage rates are high, in some instances 2000% or more.
That is one area that brought payday loans into the news, the high interest rates.
They also have been in the news for poor collection practices, and allowing clients to roll over the loans multiple times, which basically keeps the borrower further in debt.
Then came the FCA/Financial Conduct Authority’s new regulation on the capping of fees, and the number of times a payday loan can be rolled over. This caused many payday lenders to close up shop.
Now in the news is the report that the number of complaints against payday lenders has increased by over 350% since the “clampdown” by the FCA went into effect.
The figures show that the Financial Ombudsman Service/FOS received 4,186 complaints against payday lenders in the first six months of this year.
And it is not just payday lender complaints the FOS receives, but also PPI/payment protection insurance complaints as well.
Caroline Wayman the Chief Ombudsman said, “Although it’s a few years now since PPI complaints peaked, we have been receiving over 3,000 a week for six years running – despite wider expectations that numbers will fall.”
So if you have taken out a payday loan, can you claim money back through a complaint with the FOS?
In some instances, yes.
Some payday lenders have already refunded clients money due to complaints, usually the complaint would stem from the fact the borrower could not afford the loan and the payday lender did not fully or properly investigate or underwrite the loan, looking at affordability.
If the borrower had to roll over loans, or take out more loans to pay the first loan, this could show affordability issues, and the borrower may be due a refund.