Payday Loan Ombudsman Victories - Large Refunds!!!!

Hanky_Panky

Don't believe a word of it !

I might be persuaded if I see the Ombudsman decisions in each case but otherwise...I'm out !

rizla_king

simonp96 wrote: »

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=20264

And this is a similar decision that the FCA found in favour of the customer - this time against Wonga. And with a similar sitation as mine.

Thanks for that.

complaint

Mrs J complains about a number of payday loans she took out with WDFC UK Limited
(Wonga). She is unhappy that Wonga let her take out the loans as she could not afford
them. She believes it was irresponsible to lend the money to her in her circumstances.

background

Between July 2011 and October 2012 Mrs J took out ten new and five top up loans with
Wonga. The loans varied in amounts up to £1,000. Although the loans were all repaid Mrs J
says this was only possible because she took out further loans with different payday lenders.
Mrs J argues that it was not responsible to lend her the money and that it should have been
clear to Wonga that she was a ‘desperate woman’ who was getting ‘deeper and deeper into
trouble’.

The background to this complaint, and my initial conclusions, were set out in my provisional
decision dated 18 July 2013. In my provisional decision I explained why I felt Mrs J’s
complaint should be upheld. I explained that in addition to the loans with Wonga Mrs J had a
number of other payday loans with around ten other lenders. I considered what Mrs J had
said and provided about her financial position at the time she took out the loans and did not
think that the loans were actually affordable to her.

I thought that considering the number of loans that Mrs J took out with Wonga over such a
short period it should have alerted Wonga to the fact that Mrs J could have had some
financial issues. I considered what Wonga said about the checks it carried out before
granting the loans but did not believe these were sufficient. I felt that had Wonga made
further enquiries it would have been apparent that Mrs J could not afford to repay the loans.

I explained that I was minded to instruct Wonga to refund what Mrs J had paid to Wonga,
with interest, less what she had received in capital sums from the loans. I asked both parties
to provide any further submissions before I considered the complaint again.

Mrs J responded to my provisional decision and said that she accepted my conclusions.
However, she feels she has been treated abysmally and believes the additional payment of
£250 recommended by the adjudicator should also be paid. She also explained that her
husband is struggling to obtain finance for a car and she believes this is because of the
number of loans that she took out with Wonga. She would like the loans removed from her
credit file and believes this is the least it can do as it has caused her a great deal of heart
ache and ‘financial destruction’.

Wonga responded to my provisional decision to say that it does not agree with or accept my
provisional conclusions. In summary, Wonga says it is satisfied it has met with its regulatory
requirements and it has not breached a code of practice that refers to its lending
requirements. It has again referred to the checks that it carried out before agreeing to lend to
Mrs J and is satisfied that Mrs J’s credit file did not indicate she was in financial difficulties or
that she could not afford the proposed borrowing.

It does not believe my provisional decision is fair, reasonable or accords with the law. It
refers to the requirements set out in the Office of Fair Trading’s (OFT) Irresponsible Lending
guide and the Finance and Leasing Association’s (FLA) Lending Code and explains why it
feels that it has complied with them both. It thinks that the reasonable factors used to assess
each application were proportionate to the loans being applied for and its checks formed a
sound a proper credit assessment.
It notes that Mrs J had a responsibility to ensure the loans she was applying for were
affordable to her and she failed to inform or alert it to any concerns she would have had
about the loans being affordable. It says that had Mrs J contacted it at any time to say she
was in financial difficulties it would have acted appropriately and worked with her to find a
solution.

my findings

I have reconsidered all the available evidence, including Mrs J’s and Wonga’s further
comments to decide what is fair and reasonable in the circumstances of this complaint.
Wonga’s response to my provisional decision was substantial and although I have only
summarised the response above I have carefully considered its response in full.

Wonga has referred to the guidance set out by the OFT and FLA and what is expected of a
lender when accepting a loan application. This guidance sets out a number of things that a
lender may consider when assessing a potential customer’s likely ability to repay a loan. The
guidance suggests that the lender looks at a combination of factors and Wonga feels that it
has complied with this guidance. It is not for this service to stipulate what factors a potential
lender must consider when assessing a customer’s ability to repay a loan. The overriding
requirement of both the OFT and FLA guidance is to ensure the borrowing being applied for
is affordable.

Wonga is satisfied with its own process and that based upon what it says it was aware of at
the time it feels the loans were affordable. However, Wonga has accepted that the checks it
made with the credit reference agency did not allow it to check whether Mrs J had other
current payday loans at the time. Wonga also accepts that it did not ask Mrs J anything
about her monthly expenditure as it says it requires information that can be independently
verified.

Wonga did ask Mrs J what her income was but I see little benefit of recording a potential
customer’s income without establishing how much of this would actually be available to meet
the required loan repayment. I accept that it may not be practical to ask a consumer to
provide an extremely detailed breakdown of their income and expenditure when applying for
a loan. I also realise that the OFT and FLA guides do not state that income must be
assessed against expenditure.

However, I think it would be prudent for a lender to be confident that a borrower did have
sufficient disposable income to meet the required repayment when it is due. It could be
argued that this is possibly more important when a borrower is required to repay the entire
capital and interest in one month, rather than repaying the loan in smaller repayments, as
this is likely to have a greater impact on their disposable income. Wonga argues that any
assessment should be ‘proportionate’ and implies that the duration and size of the loan is
something that should be considered when assessing affordability. The size or duration of a
loan would not alter the fact that a lender must be satisfied the borrowing is actually
affordable. Wonga also believes that affordability is evidenced by Mrs J repaying the loans
but this appears to have only been achieved by Mrs J taking further borrowing with additional
lenders.

I agree that it is reasonable for a lender to consider a customer’s previous repayment history
when considering a new loan application. Previously repaying a loan is not however, in
isolation, clear evidence that a new and possibly greater loan is actually affordable to a
customer.

While I note that Wonga says it considered many factors when assessing Mrs J’s ability to
repay the loans I am still note persuaded that there is sufficient information to show that
Wonga could be satisfied the loans were actually affordable.

Mrs J has told us what her income and expenditure was at the time that the first loan was
taken out, along with two further statements for other times during her relationship with
Wonga. It is clear from the first income and expenditure statement that there was very little
disposable income available. It is also clear that there is insufficient disposable income to
meet the required £439 that needed to be repaid for the first loan with Wonga.

Wonga has asked that each loan is considered separately and although my provisional
decision did not explicitly refer to each time a loan was taken with Wonga, I have however
considered Mrs J’s circumstances at each time she took out a loan. Having done so, I have
not seen sufficient evidence to persuade me that any of the loans were actually affordable to
Mrs J. This becomes even more obvious when considering the loans that Mrs J had taken
out with other payday lenders. An example of this was referred to in my provisional decision
where in August 2011 Mrs J took her third loan with Wonga but had already borrowed £983
from three different payday lenders earlier in that month. In September 2011 Mrs J took out
both a top up and new loan with Wonga, as well as borrowing £635 with two other payday
lenders that month.

Wonga argues that Mrs J also has a responsibility to ensure the loans she is applying for are
affordable and I agree. However, it is Wonga’s overriding responsibility to ensure that Mrs J
could actually afford to repay the loans. I have considered the circumstances surrounding
each loan application and I am satisfied that the loans were not actually affordable and
should not have been agreed.

I have reconsidered what redress I think to be appropriate and for essentially the same
reasons as explained in my provisional decision, I still think it would be fair and reasonable
for Wonga to reimburse the interest payments that Mrs J made. I am satisfied that Mrs J has
had some benefit from the capital sums she borrowed and do not think it would be fair to
instruct Wonga to refund these amounts. Had Mrs J not taken out the loans she would not
have incurred the additional cost of the interest payments on each loan and this is why I
think Wonga should now reimburse the costs of the interest charged. Interest should also be
applied to the interest being refunded.

Mrs J feels that she should also receive an additional payment of £250 in recognition of the
distress and inconvenience that she has been caused. This is something that I had
considered before issuing my provisional decision and I have also reconsidered again now.
However, while I do not doubt this has been distressing for Mrs J I am satisfied that
instructing Wonga to refund the cost of the interest, with additional interest, is a fair and
reasonable award in this case.

Finally, Mrs J also feels it would be fair to instruct Wonga to remove the information recorded
on her credit file as she says it is causing problems for her husband who is applying for
credit. A credit file is intended to reflect the historic borrowing of a consumer and as the
information about the Wonga loans is correct I do not think it should be removed. Mrs J also
believes that it is the information about the Wonga loans on her credit file that is affecting her
‘credit score’. I am not persuaded however that it is the information about the Wonga loans
that is the sole reason for her having the rating or score that she has. There are other entries
on the credit file, that I do not need to refer to specifically here, that will have considerable
impact on her credit rating and these do not relate to Wonga.

While I appreciate Wonga, and possibly Mrs J, may not be entirely happy with my decision,
having carefully considered the submissions from all parties I am satisfied that this complaint
should be upheld. I am also satisfied that the redress is fair and appropriate.

my final decision

My final decision is that I uphold Mrs J’s complaint and I instruct WDFC UK Limited (Wonga)
to:

- refund the payments Mrs J had made to each of the loans, along with interest at 8%
simple per year from the date of each payment until the date of settlement;

- less the money that Mrs J actually received from each of the loans.

If Wonga believes that tax should be deducted from the interest element of my award, it
should provide Mrs J with the appropriate tax deduction certificate so that she is able to
claim a refund if appropriate.


ombudsman

eyeopener2

Ace, absolutely ace.

h07_2012

Well done for admitting your problem and getting help, I wish you luck and a debt free future. Some of the comments on here are ridiculous, clearly looking for a reaction from you.

pieman2020

Well done simonp96 for admitting this all and fighting this.

I am flabbergasted by the response of some people on here and have signed up on here to reply.

I also have suffered from a similar gambling problem, which also led to PDLs around the same time as you. Compulsive gambling, also called gambling disorder, is the uncontrollable urge to keep gambling despite the toll it takes on your life. Gambling means that you're willing to risk something you value in the hope of getting something of even greater value.

Gambling can stimulate the brain's reward system much like drugs such as alcohol can, leading to addiction. If you're prone to compulsive gambling, you may continually chase bets, hide your behavior, deplete savings, accumulate debt, or even resort to theft or fraud to support your addiction.

Compulsive gambling is a serious condition that can destroy lives. Although treating compulsive gambling can be challenging, many compulsive gamblers have found help through professional treatment.

For people to come on here and start telling you that you are irresponsible do not realise the effect something like this has on a person. I used to hide my gambling, online slots was my choice spending hours sometimes chasing a bigger and bigger win not even for the money just for the thrill of it, even down to my last £1.

People also seem to forget that PDL companies back in 2010 were extremely poor at credit checking and affordability checks. Most of which have improved after a number of reports and investigations. They were also always advertised as no credit check loans, so it was easy to get more and more of these running.

They also seem to forget that many PDL companies were linked and you could in fact take out a PDL from 1 company, roll it over and get another PDL from their sister company at the same office. It was scandalous.

Most people who use PDLs have an underlying issue and these companiesdo prey on vulnerable people. Its good to hear a good end to a PDL saga

eyeopener2

Well said pieman, this place is great most of the time but there is a fair share of sanctimonious preaching from some quarters (one poster really surprised with their invective).

There is another thread around about speeding and the majority were very supportive, I personally wasn't so stayed out of it, but it does show how people's moral compass lies and how we are all different in attitudes towards things. Getting away with a speeding offence that could kill or maim ( not being banned -possibly) wasn't jumped on, or seen as serious by some,as the replies here about not repaying debt or being addicted to gambling.

However, it all adds to the mix and at least makes you think of the other argument, whether you agree or not.

Which is the point of a discussion forum after all.

Monkeyballs

I think it all boils down to whether or not it's something that you do or have experience of...

I gambled, I didn't think it was a problem at first and slowly I started to sink lower and lower until the point where I would rather gamble than eat! Although I never did anything illegal there were times when I was so hungry I considered stealing food - enter LBM stage right! Many people who have been in my shoes will sympathise...

I don't drive, therefore the idea that someone would break the law and despite knowingly having done so wants to know how to get the best result for them self and gets sympathy from others despite the potential risks? I don't get it and have no reason to believe that someone going 100 mph + on a motorway wouldn't think twice about travelling at 35 mph + through residential streets or villages? Would the same there query garner sympathy? I doubt it...

But, you're right this is a discussion board and people have opinions - it's just a shame that not everyone's is as correct as mine

MB

David1345

The gambling issue isn't the main one here, is it?

Doesn't this suggest a huge opportunity for everyone who has ever been trapped in the payday loan cycle?

I've been in a huge mess with them due to unstable income - borrowing from one to pay another, arranging temporary repayment plans to try and get out of the hole, and then being invited to borrow more again as soon as those plans have finished. And all of it with a terrible credit record. Of course it's partly self-inflicted, but the irresponsibility of the lending is astounding...

Isn't what the OP has achieved a major breakthrough/precedent?

Monkeyballs

Potentially, or it could just be the FCA flexing their muscles to show they're not a toothless lion

Bottom line is that it's a two way agreement but if you have any evidence to suggest you made no bones about hiding any of your problems then it looks like it's worth a shot

Thinking about it, your average PDL website states it's not intended as a long term lending solution but if they continue to offer it as a long term solution without spotting the trend then they're not taking responsibility for their own actions in my eyes...

MB

Grzegorz_Kowalski

Deleted%20User wrote: »

No type of lender has to offer a repayment plan! simples

Could you please provide me with the example of financial institution that in case of arrears - goes straight to the court?