Paragon Personal Finance

Chris_1973

Hello, sorry that my post is rather long. I am new to the forum, and I am basically just looking to tell my story because I am fuming! I am being charged £24,000 interest on top of a secured loan for £36,000 by Paragon Personal Finance. The conditions have been deceptive and unethical throughout. I think actions of this kind by dubious finance institutions are disgraceful and should not be allowed.
The story of my struggle with Paragon begins in 2006, when I had accrued a difficult level of debt as a result of a failing business I was running at the time. As I wanted to end the business ethically and pay the debts owed to my creditors to the best of my ability, I had already been advised by associates that an IVA arrangement may be the best course of action. Upon a family recommendation, I arranged an appointment with a local Financial Adviser named Michael Scott, of Affinity Lending Company. Upon explaining the situation, Scott quickly steered me away from exploring and IVA arrangement and set us on a pathway towards obtaining a loan secured against the house I owned with my wife to cover all debt via Paragon Personal Finance.
The strategy he devised would mean that the loan would be absorbed into our mortgage within a few years. When we asked for reassurance that the loan was trustworthy he pointed us towards the 9.1% APR and distracted us from looking at any deeper detail. At the time this seemed to present a solution to my problems and we put our trust in this individual’s advice. Unfortunately this turned out to be a mistake: Scott disappeared shortly after securing the loan for us, and I believe left the profession on grounds of ill mental health – he is now untraceable, and the company he worked for, Affinity Lending Company, was dissolved in 2010 by Ian Cruickshank. He left us without any of the guidance he had assured would follow. Upon attempting to further the situation ourselves, we were informed that because of the way it was structured we’d be unable to absorb the loan into our mortgage anyway, at which point it became clear that his financial advice had been very poor indeed.
Now 9 years on and despite huge struggles, we have managed our payments to Paragon throughout the duration of the loan thus far. However at the beginning of this year we were looking to improve our financial situation as we were hoping to send our son to University, and my wife was about to undergo surgery so we knew we were entering a period where finance would be tight. We also wished to remove the debt to Paragon from our property so we were free to make future plans for it.
Upon investigating how we could do this, we were deeply distressed to discover the remaining scale of the arrangement. At no point did the afore-mentioned Financial Adviser or anyone from Paragon indicate the length of time that we would be saddled with the loan, nor did he clarify, or even mention, the frankly unbelievable interest rate that we would pay. This was laid out to us by our accountant after we asked him to investigate on our behalf. He estimated that we have paid approx £30,000 of the £36,000 borrowed, but Paragon would still expect over £30,000 further in payments.
This would simply crush our plans for the future and seriously hinder the progress of our children. It was also very difficult to marry together the 9.1% APR we had always been pointed to with this newly discovered interest rate where you seemingly are expected to pay almost double the amount borrowed.
At this point I wrote to John Webb, Head of Personal Loans at Paragon, and appealed to him courteously as a finance professional to investigate the matter and offer me a reasonable & realistic settlement figure. Thus began a long and frustrating process in dealing with a company which refuses to communicate in a fair and ethical way with its customers.
Webb did not reply. Instead I received a phone call from a representative approximately two weeks later. He sounded bored, ambivalent and dejected. I would soon learn that these are the typical characteristics of all Paragon representatives. He informed me that because the loan is secured that they would not offer a reduced settlement. When I asked why there was no reasoning or expansion on the matter. When I asked how much he knew about my situation it became clear that he had not read my letter and knew next to nothing. When I asked why John Webb could not reply personally he said he didn’t know. When I asked about the colossal interest rate I was told of a nonsensical system whereby they ‘recalculate the interest rate each month’. I was flabbergasted. The official line was basically that they literally just pluck an overinflated number out of the air and con their customers with it.
At this point I raised the case with the Financial Ombudsman Service. After receiving prompt and initially optimistic feedback from their representative (they agreed that the conditions on which I had been sold the loan appeared unethical, and I may be able to access compensation), they asked me to acquire further information from Paragon. This was a long drawn out process where Paragon appeared to drag their heels wherever possible, but the fact that the FOS was involved appeared to make them actually act eventually, and I was supplied the relevant documents more than a few months later.
Sadly the FOS soon informed me that they could not take the matter any further because Paragon were ‘unregulated’ at the time when the loan was taken out. Another blow for me and further confirmation that, in a nutshell, I had been tricked by a disappearing charlatan into a heavy debt to an organisation which, despite acting with the veneer of a respectable finance organisation, was actually no better than a street-crawling loan shark.
By calling upon the kindness of relatives I have now managed to pull together £15,000, which I have offered to Paragon to settle the account and allow me (and hopefully them) to move on. My standpoint is that this is an amount which covers my remaining debt and also includes over £9,000 interest, which I think is a reasonable amount for them to recoup for providing the loan under such dubious circumstances; and is surely a more logical and ethical figure than theirs, which was almost double the amount borrowed. It also stays close to their 9.1% APR figure, which is the only number relating to interest which I was ever shown in relation to the arrangement. I am currently awaiting a response to this offer and will post this here when I have it…

PeacefulWaters

So you took a secured loan at a high rate over a long term and are wondering why you've had to pay lots of interest?

Is that the summary of it?

dresdendave

OP, I'm not sure if you are looking for advice as to the accuracy of Paragon's figures or if you just want to have a rant.


If it's the former, you need to strip the irrelevant waffle (at least 90%) in your post. Quote relevant information such as term of the loan, monthly repayment amount, how many payments you have made etc.


As pointed out by PW you will pay an awful lot of interest on a high APR long term loan.

Chris_1973

Ok, I take it you think I should take it on the chin. Perhaps I'm naieve / idealistic and I am definitely not finance minded (or wouldn't have been in the sitiuation in the first place). I just can't believe that these kind of bully-boy tactics are practiced by banks, people get screwed over and it's perfectly acceptable to everyone. If I'd taken a loan out with Tony Soprano I'd expect to pay almost double back but these goons from Birmingham Masquerade as respectable bankers!

Thanks for the replies though. I did probably need to rant as feels like I'm talking to the wall communicating with them.

Silvertabby

Um, well - based on what you borrowed and what you have paid back it sounds like you borrowed £36K over 20 or 25 years at 9.1% APR.

You sound an intelligent sort of chap - so I'm finding it diffcult to believe that you really don't know what APR means.

dresdendave

Chris_1973 wrote: »

Ok, I take it you think I should take it on the chin. Perhaps I'm naieve / idealistic and I am definitely not finance minded (or wouldn't have been in the sitiuation in the first place). I just can't believe that these kind of bully-boy tactics are practiced by banks, people get screwed over and it's perfectly acceptable to everyone. If I'd taken a loan out with Tony Soprano I'd expect to pay almost double back but these goons from Birmingham Masquerade as respectable bankers!

Thanks for the replies though. I did probably need to rant as feels like I'm talking to the wall communicating with them.

Unless you quote us the relevant information as to the details of the loan arrangement, no one can advise whether you are being "screwed over" or just being asked to pay back the correct amount that you agreed to when taking out the loan.

Chris_1973

Thanks but I'm ashamed to say that I don't really understand APR.
I suppose that daftly I've approached this from the way I was brought up whereby if you borrowed some money from someone you'd pay them back the amount borrowed plus a reasonable amount of interest (and asking for almost double back would definitely have been in the realm of unreasonable).
Of course I now know that the wider world isn't like that...

[Deleted User]

You can't just say that paying back double in unreasonable. Given a long enough term, any rate loan will see you paying back double or more.

Richey_

With a mortgage you would pay often close to double back offer the 25 or how ever many years...

redux

The thing is that even modest interest, which you're arguing this isn't, starts to add up over a few years.

Find an online loan calculator and play with a few variations of time and interest rate, and it can become quite frightening.

From doing that, and you've given some of the numbers, it looks like if this was to be spread over about 25 years, with payments of about £300 a month, it could indeed still have £30,000 due at this moment.

So whilst some people might find that when offering early repayment that the firm expects to load it as compensation to them for future interest not earned, this isn't your position.

Your gripe is more about the history so far, that when this was sold to you it was arguably not the best choice of product that an adviser should have recommended. If paranoia was to set in, we might imagine a nice commission for this person at the time ...

Whether it can be recalculated as if the rate would have been fairer and lower all the way through, and the level of payments actually made accelerating the reduction of time left, I don't know. Well, it can hypothetically, but I have no idea how likely they are to agree.

Going by experience of helping someone talking to a different part of that company group, and reading a bit on some forums, to reach a settlement offer on an old defaulted credit card account now with Idem Servicing, I really can't be optimistic. It seems to me like a rather stubborn and sometimes inefficient organisation. If for instance their system generates an automatic letter that starts with a double lie, they should not be surprised to have to waste time dealing with a complaint about it.

The Ombudsman response seems a bit slack to me. Even if a firm was formerly not regulated, it might be expected to have improved if it has now come in from the cold.

Chris_1973

Thanks Redux, that's a helpful response and the idea of them recalculating the terms of the loan on fairer terms is one I'd not considered and can suggest to them, though like you say they are very stubborn.