FLM - Are their actions legal?

mylittlepumpkin

Hi,

Looking for some advice please.

A friend of mine took out a loan with FLM with her Mother as Guarantor.

All payments fine until December when she couldn't pay the full amount. She tried to speak with them but got nowhere. She cancelled her bank card (debit) but they managed to take the funds (in instalments) and when she questioned her Bank she was told that as it was a "recurring payment" they did not need to be in possession of a valid debit card but could still claim the money from the account. Personally I've never heard of this.

In January she made an agreement with staff at FLM and they were due to take a payment later this week. On checking her bank last evening they have taken three times the amount agreed! She has contacted her Bank again (as FLM have not got her up-to-date debit card details) and was told the same as before - reference a "recurring payment". This has now left her with no money and two small children.

I told her to contact her Bank and claim it's an unlawful transaction but they say they can't do anything.

Can anyone please offer any advice?

mylittlepumpkin

DCFC79

Its clear the card details aren't needed and your friend is in some deep mess.

Oh and tell your friend to open a basic bank account with another bank and tell her employer if there is 1 of the new account details but do not tell FLM of the new account.

SnowTiger

DCFC79 wrote: »

Its clear the card details aren't needed and your friend is in some deep mess.

Oh and tell your friend to open a basic bank account with another bank and tell her employer if there is 1 of the new account details but do not tell FLM of the new account.

And the friend had better warn her Mother that FLM will be dipping in to her bank account next month.

immoral_angeluk

The bank is right. A continuous payment authority has been set up so she needs to contact FLM advising that she is withdrawing consent for the continuous payment authority. The problem she will then have is they will go after her mother. Both of them should ideally change their bank account ASAP, set up a payment arrangement by standing order (NOT direct debit) and never use payday loans again. They should also make sure they don't give ANY card details or pay by card, as they can and will then keep that information to take further amounts even if it's not her card.

KingElvis

Yep, mum needs to be warned that they will take the money from her without any thought.

jonnyd281

immoral_angeluk wrote: »

The problem she will then have is they will go after her mother. Both of them should ideally change their bank account ASAP,

Great so following your advice, they will trash her mothers credit rating as well, as Guarantor she is liable for the loan if her daughter doesn't pay. This is the downside of being a Guarantor.

immoral_angeluk

jonnyd281 wrote: »

Great so following your advice, they will trash her mothers credit rating as well, as Guarantor she is liable for the loan if her daughter doesn't pay. This is the downside of being a Guarantor.

Well yea, but by being guarantor mother has now financially linked herself to the daughter anyway. I'm presuming daughter's credit isn't great as it stands so it will already be trashed.
Hence my advice that they both need to change bank accounts ASAP. She has already defaulted, which means that mother is involved now whether daughter likes it or not.
They BOTH need to change bank accounts and to set up an arrangement once their money is in a different account and can't be debited by FLM without notice.

Apples2

Not sure about downside, it suggests there is an UPSIDE to being a Guarantor.

There are NO positives to being a guarantor, this daft loan is costing a ridiculous amount in interest even if it goes according to plan.

Recurring Payment Authority is entirely normal, almost as normal as not repaying loans!!

OP - you say

In January she made an agreement with staff at FLM and they were due to take a payment later this week

Was that in WRITING or just a worthless phonecall?

There is zero point in arranging a payment schedule over the phone, it means nothing, it MUST be agreed in writing.

They are simply taking the money exactly the way it was agreed in the first place, if they cannot get the money out of the applicants account, they will jump straight into the guarantors account. You may not accept that, but it is precisely what they both agreed to when applying.

There are no "unlawful" transactions going on, it is normal (as the bank are advising).

Between the two of them, they need to clear this loan asap, charges will mount, credit ratings will be hammered.
Remember, the Mother was happy enough to wear the risk of default when NO other lender out there was prepared to.

There is no point trying to move the risk back to the lender now.

You won't find a single post on MSE where the members advise one of these daft guarantor loans as a good idea, it is madness.

Closing accounts may enable a retention of access to cash, it is not a solution. The overall debt will absolutely rocket if they can't get payments. They will catch up eventually.

dtsazza

mylittlepumpkin wrote: »

when she questioned her Bank she was told that as it was a "recurring payment" they did not need to be in possession of a valid debit card but could still claim the money from the account. Personally I've never heard of this.

My understanding of this in layman's terms is that they were given the card details to initially agree to a payment in July, a payment in August, a payment in September, etc.

If the card details later change, it doesn't remove the existing authorisation; they've already presented the card details to the bank as permission to take out (say) £4,000, at £200/month. Whether the card is lost, stolen, cancelled, etc. - doesn't matter, as FLM aren't trying to authorise new transactions.


As for actual advice, I don't think there's a particularly easy way out of this. There is going to be a default, and FLM will be going after the mother in order to get the funds (that's the point of a guarantor after all). If the mother can afford it, it's lesson learned; if she can't, your friend is in a similar situation to defaulting "solo", except that the mother's credit rating will also be trashed.

DCFC79

SnowTiger wrote: »

And the friend had better warn her Mother that FLM will be dipping in to her bank account next month.

Ah yes then theres that too,

vax2002

The Buck stops at her mum, it will be her mums bank account that gets emptied and her things that will be taken away by bailiffs.
She should hold a fire sale and pay the loan off ASAP