Movement Against PayDay Loan Companies

michael1983l

Hello All,

Please edit my post if I am not allowed to do this sort of thing, but I have sent a complaint the FOS about Payday loan companies and would like your help. I have set up a petition against these companies and please sign and pass on the link to those that agree with me. I am hoping to approach the FOS when we reach 50k signatures so please circulate it amongst your friends that you think will support us.

http://new.petitiononline.com/9ay6a7/petition.html

Here is the letter I have sent

Dear Sir/Madam

I wish to issue a general complaint towards all Payday Loan companies which operate within the UK. I believe these companies target those in financial hardship and major debt problems, fully aware that the targeted customers are unlikely to be able to afford to pay them back in full on time. Interest rates seem to be in excess of 2000% APR and can hit 3000% and as the clients are likely already behind with many payments the chances of the client extending their loan is high. These extensions eventually accumulate interest to a point of saturation for the borrower and in many cases with no more options are forced into debt management, IVA or bankruptcy.

In many cases the people entering these loans are at a point of desperation where they feel that there are no other options available to them and will take out these loans without analysing the consequences as it satisfies their short term crisis. These loan companies will put cash into people’s accounts the same day and some within the hour making these loans far too easily accessible. This is causing many people to not actually explore much more sensible avenues like approaching their current lenders and asking for reduced payments ect.

Also these companies seem to be relentless when chasing payments that have fallen behind. I have read many reports on consumer forums like www.moneysavingexpert.com of people falling behind and receiving several phone calls a day with letters displaying details about their debt overtly also. There is many cases where customers of these companies are approaching the Payday Loan companies to arrange payment plans and them being refused even though the customer is offering the maximum they can afford in payments. Usually when a client is refused the Payday Companies alternative solution is to offer the customer a further loan to cover the loan already taken out, I do not call this responsible lending, do you?

I feel with the difficulties many families are facing at the moment that these companies are profiting on people’s misery. These loan companies often destroy lives and do not act morally or responsibly when lending. I feel it is ultimately the Financial Ombudsman Service to acknowledge the problems that these companies are causing for families in financial hardship and should take measures to at minimum tighten regulations but preferably outlaw them all together. I would recommend that by minimum Payday loan companies should not be allowed to payout any earlier than 5 working days after acceptance of application with the client having the option to cancel at any time without penalty during that time. I feel this would eradicate some of the impulsive borrowing brought on by people who feel desperate and would force them to explore all other avenues available to them first. If the client really is in need of money for basics like Utilities and food then they can approach the JobCenter plus instead for a crisis loan.

I have posted this letter on a consumer forum and have set up a petition of which I hope to deliver to you once we have 50,000 names. Please take action now before many more lives are ruined by these companies.

Kind Regards

thanks for your support.

MarkyMarkD

The FOS's job isn't to undertake campaigns against particular segments of the financial services market.

If you have an issue with the operations of this type of company in principle, then you need to approach your MP, not the FOS.

They are not doing anything illegal, and they are not doing - across the industry, as you seem to think - anything that the FOS can stop them doing either. FOS doesn't make up policy, it simply provides a mechanism for consumers to complain where they have been misled/mistreated in some way.

Being stupid is not a reason to be prevented from lending, under most people's interpretation of reasonableness. Not understanding the (fairly clear) terms of most payday loans is also not a reason for the facility to be unavailable for those who DO understand them.

michael1983l

MarkyMarkD wrote: »

The FOS's job isn't to undertake campaigns against particular segments of the financial services market.

If you have an issue with the operations of this type of company in principle, then you need to approach your MP, not the FOS.

They are not doing anything illegal, and they are not doing - across the industry, as you seem to think - anything that the FOS can stop them doing either. FOS doesn't make up policy, it simply provides a mechanism for consumers to complain where they have been misled/mistreated in some way.

Being stupid is not a reason to be prevented from lending, under most people's interpretation of reasonableness. Not understanding the (fairly clear) terms of most payday loans is also not a reason for the facility to be unavailable for those who DO understand them.

I am raising the issue with the FOS so that they can raise it with the relevant policy makers if enough people agree. Whilst I would like them to be made illigal in their current form I would be just as happy with the restriction on money being unavailable for 5 working days meaning the applicant thinks about it a little better. similar regulations have been undertaken in other areas of financial services i.e. when going through mortgages.

If you don't agree with my aim then yes don't support me however even though there is a scope for these companies being used sensibly they are more often used rashly. I think we can all agree on that. so the compromise is allow the service to be available but at the sa,=me time forching the applicant into a period of evaluation.

michael1983l

Can I ask for an honest response please, that is do most people think that I am in the wrong/barking up the wrong tree here, because I can easily scrap it if thats what most people think.

sp1987

If people are financially desperate enough to use Payday lenders with huge rates of interest then if these were to be taken away as an option the same people would be stuck relying on loan sharks and compromising their physical safety if they are unable to keep up with repayments.

I do not think banning unsecured lending options that provide loans to those with no other option is the first port of call. Plus, some individuals are able to utilise the payday loan companies for single lending periods and therefore benefit from the instant cash if they are able to repay the full amount at their next payday. I would have no hesitation using a company like quickquid if I were to need money for a determined period and was able to afford the payment in full, barring a more favourable finance option. In a free market we should all have the freedom to choose from any lending options available to us at our own risk. It is hardly as if these companies do not publish their extortionate rates for all to see.

michael1983l

For every one person that uses Payday loan companies responsibly I bet there is at least 10 that don't. I am not saying scrap the service completly just scrap it in its current form. If a person knows they are going to run out of money and want to use it then plan and make your application in advance so that you get the money when you need it. Surley based on your argument then delaying payment 5 days will promote the borrower to plan their money better if they have to think in advance.

Like I say there are also alternative for those that need it desperatly for valid purposes like crisis loans.

Also how many of us know a loan shark, I certainly don't and wouldn't know where to find one either. If the convenience of calling up and getting your money in an hour is taken away alot of people just won't be bothered and they are probably the people that didn't really need the money in the first place.

sp1987

michael1983l wrote: »

For every one person that uses Payday loan companies responsibly I bet there is at least 10 that don't. I am not saying scrap the service completly just scrap it in its current form. If a person knows they are going to run out of money and want to use it then plan and make your application in advance so that you get the money when you need it. Surley based on your argument then delaying payment 5 days will promote the borrower to plan their money better if they have to think in advance.

Like I say there are also alternative for those that need it desperatly for valid purposes like crisis loans.

Also how many of us know a loan shark, I certainly don't and wouldn't know where to find one either. If the convenience of calling up and getting your money in an hour is taken away alot of people just won't be bothered and they are probably the people that didn't really need the money in the first place.

I have had occasions previously where cheques have not cleared until a couple of days late and the like. If I were in a position where something ''needed'' to be paid that week and funds were guaranteed to be on their way then payday loans would be in actual fact, a sensible option. Bank loans take a while to come through, overdrafts may be declined. You do not have to manage your finances poorly to have a few days or occasions in life where a problem occurs. For people who have a credit card on 0% or low rate, this is easily mitigated and paid off asap. Having to wait 5 days to receive the funds would render the option useless for the above situation. Thankfully, it is not a position that I have been in as delayed cheques or funds have never interfered with priority payments.

Sadly the people who will repeatedly use these options irresponsibly will do so out of desperation or stupidity and either could lead them to riskier, completely unregulated lending. Catch 22 sadly!

As for irresponsible borrowing, the sort of people that really get into a pickle of their own doing (those with circumstances beyond their control obviously excluded) will manage it with high apr debts or lower ones such as car finance, loans etc.

I agree with your motives but I just do not feel that it would be a workable solution. The government should publicise things like crisis loans more, as so many people do not know they exist.

michael1983l

I see your point and kind of agree with it, however I think the positives of putting into place what I propose far outweigh the negatives. Even if my solution isn't viable the cogs could be put into motion for one that is and manages to protect the consumer.

In my opinion a Payday loan is a credit agreement which could have terrible implications if not thought about properly. Giving people a compulsary thinking period can only do good in my book.

Wutang_2

49,999 to go!!

I would wish you good luck but I support the opposite of this

EmzJenks

I would have to agree with what the others have said. Payday loan companies aren't doing anything wrong, they make it completely clear what their APR is, you sign a contract just like any other loan. Yes people get into trouble with them but many others don't & only use them once in a blue moon (myself included, I needed a quick cash input took a payday loan for £100, paid it back straight away on payday. job done)

I understand that you're trying to help people not get into more debt, but at the end of the day everyone is responsible for their own actions. If you take out multiple pay day loans & then can't pay them back then that isn't the pay day loan companies fault. They kept their end of the deal.

Typhoon2000

Nothing wrong with Payday loans in my opinion, they fill a very valid segment in the market. The interest rates only look horrible because APRS are calculated on interest and fees over a year if no payments are made. I see nothing wrong with paying back £110 for a £100 instant cash loan over a week till your next pay day. The problem only occurs if you dont pay it back as agreed and keep extending the loan.

In fact, IMHO a petition that reads "Movement to stop those who cant pay back a loan on time from applying for a Payday Loan" would almost make more sense....