Tricky Question for the Experts

xlnc99

Hi Everyone,

A question in regards to loans and the affordability and vulnerability checks when taking out a loan. I know there is some refunds being done to pay day loans and i had a quick look on the FOS website in regards to loans. It seems this applies to all loans and not just payday loans. On the FOS website it the wording is loans and credit agreements so could be more then just loans.

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/consumer-credit/unaffordable-lending

My question is:

Does this apply to credit builder loans i.e:

Loqbox
Credit Improver
I count Credit Builder
Cash Plus Credit Builder

Do they same checks have to be carried out? Its slightly confusing as although its not a payday loan as such the sites still advertise it as a loan. I.e Credit Builder states its a loan. But they technically dont give you any money, you are just paying back a loan they keep as fees.

Any one know the answer to this one?

[Deleted User]

All lending should carry out some kind of affordability assessment, but it needs to be appropriate to the type of lending.

xlnc99

So it does apply to those 4 companies given they try to sell it as credit building and dont actually give you any money even though you are paying it back

[Deleted User]

It's going to be a very low bar.

How much were the repayment and over what period?

xlnc99

Cash Plus - 5 pound per month over 12 months.

However, although its a low bar there were circumstances that included vulnerability.

1 - Unemployed during the loan period
2 - Depression, Anxiety during the loan period (Doctors note as proof)
3 - Other personal circumstances going on around the time
4 - The bank acccount with Cash Plus had been emptyy for months

The main issue here is Cash Plus did not even bother with a phone call. DId not speak to anyone. No questions asked about whether you could afford it, no questions asked about employment, state of mind. Basically emailed over an agreement to sign saying you would pay 5 quid a month instead of fees (i never paid fees as i didnt use the account).

Not one single question asked

According to the FOS website they broke every single rule possible

Even Payday loan companies make you fill forms out and make you give some information about yourself or your financial situation.

boo_star

xlnc99 wrote: »

1 - Unemployed during the loan period

During? Or from the beginning?

2 - Depression, Anxiety during the loan period (Doctors note as proof)

There's no way they'd know about any of this, nor would it be a reasonable thing to ask about.

3 - Other personal circumstances going on around the time

Not really worth mentioning if you won't say what they were.

4 - The bank acccount with Cash Plus had been emptyy for months

I'm sure there are plenty of people who have empty Cashplus accounts. I don't think it's a reasonable sign that you can't afford it.

The main issue here is Cash Plus did not even bother with a phone call. DId not speak to anyone. No questions asked about whether you could afford it, no questions asked about employment, state of mind. Basically emailed over an agreement to sign saying you would pay 5 quid a month instead of fees (i never paid fees as i didnt use the account).

Not one single question asked

According to the FOS website they broke every single rule possible

Even Payday loan companies make you fill forms out and make you give some information about yourself or your financial situation.

The checks only need to be proportionate. There's a massive difference between a Payday loan company lending you £200 for a month and wanting £400 back to a company "lending" you £120 over 12 months at 0% APR.

xlnc99

1 - unemployed from the start
2 - according to the FOS its the lenders job to enquire about the persons vulnerability and mental state of mind. They must do their checks proir to lending according to the FOS website. (i sent the link above)
3 - True - we can ignore this as its personal
4 - If your bank account is empty then surely that rings alarm bells? If that doesn't then what does?

Payday loans dont need to be £200 per month, i got a pay day loan once for £90. But again that is not the issue at hand, its not about reclaiming anything. My point is they carried out zero checks. I did not even speak to anyone, even payday loan companies make you fill out a form. I wasnt even given a form to fill out, just a agreement to sign.

They did zero checks! So i agree they need to be proportionate but there must be some checks done! I mean they didn't even confirm my name or address!

Bermonia

Please tell me where FOS state this... it has never been a requirement for a lender to enquire about someone’s mental state of mind... if they are made aware then they have to make reasonable considerations. Even then the would not I’m split be able to refuse to lend to anyone who had felt depressed at some point (would be seen as discrimination).

Lenders do not check nor do they have the ability to check the balance or use of an account you have supplied.

In my professional opinion you do not have a hope in hell, you seem to have misinterpreted the rules or are getting your information from a poor source.

xlnc99

You are wrong Bermonia - I have posted the link in this thread. I suggest you read the FOS link i have posted on this thread and it is all in there, clear as night and day. There is a whole section on Vulnerability

IF i am wrong then i should

1 - Complain to the FOS about what they have written on their own website
2 - Get FOS to refund all the loan companies that have repaid interest and charges for these very reasons

boo_star

xlnc99 wrote: »

1 - unemployed from the start

OK, although even on benefits £10 a month should be affordable.

2 - according to the FOS its the lenders job to enquire about the persons vulnerability and mental state of mind. They must do their checks proir to lending according to the FOS website. (i sent the link above)

It's not a cut and dry as that, obviously. If it was every lender in the country would be being raked over the coals by the FOS for this. I've yet to fill out a credit application where my "vulnerability and mental state of mind" were questioned. I'd probably think "what business is it of yours?" if I ever was quite frankly

[4 - If your bank account is empty then surely that rings alarm bells? If that doesn't then what does?

It says to me "They're using a different account as their main account." I have several accounts, all but 2 are empty.

Payday loans dont need to be £200 per month, i got a pay day loan once for £90. But again that is not the issue at hand, its not about reclaiming anything. My point is they carried out zero checks. I did not even speak to anyone, even payday loan companies make you fill out a form. I wasnt even given a form to fill out, just a agreement to sign.

But Payday loan lending is not the same as this. This has minimal repayments and no interest. Payday loan companies have more substantial repayments and usually eye-watering interest rates. You're comparing apples to oranges.

Hayleyjj

Can anyone tell me how to post a question. New here and would like to start a thread