FOS launch a campaign to combat unfair payday lenders
Few news stories of the past few years have been as pervasive as that of payday loans. A financial phenomenon without precedent, payday lending has reshaped how we think about borrowing money. A few short years ago, payday borrowing – offering short-term loans at astronomically high rates to keep the borrower going until the next payday – was a tiny industry. Recent reports now indicate that the business is currently worth more than £800m a year. The industry has flourished in a period of economic uncertainty. As many ‘traditional’ banks and lenders floundered, payday loans have become more popular than ever.
For those borrowers in need of a speedy cash transfer to tide them over until the next month, short-term loans can appear to be an attractive proposition. However, the loans are not without danger. The Financial Ombudsman Service (F.O.S.) claims that in 2014 an increased number of callers are contacting them to discuss ‘money worries’ and people who’ve taken out short-term loans are particularly likely to find themselves in financial trouble.
If you feel that your lender has treated you unfairly, you can ask the Financial Ombudsman Service to step in. The FOS is a service established in 2001, which helps settle disputes between consumers and UK-based financial services businesses, such as banks, building societies, insurance companies and finance companies. The F.O.S.’s job is to sort out disputes between people and businesses – they act quickly, fairly and informally. They’re a completely independent body and anyone struggling with short-term loans should consider contacting them.
But what can borrowers do if they find themselves unable to make their repayments on time? The FOS advises that ‘it’s important that you’re upfront with lenders if you’re struggling’. Your lenders or bank should be working with you to find the most effective way for you to make your repayments. But, unfortunately, some customers of payday loan companies have found them unhelpful or uncooperative.
Don’t suffer in silence if you’re struggling to balance your books. There is expert advice available and the FOS is an excellent place to start.
Not all lenders are the same. The FOS state that many companies try their very best to help their customers. But how do you tell if they’re not treating your treating you fairly?
Be very cautious if your lender:
- Doesn’t listen to your attempts to resolve the problem or is completely reluctant to find a solution to your issues.
- Calls, emails or texts you so much that is becomes harassment.
- Contacts anyone else to discuss your debt – without your permission.
- Makes repeated attempts to remove money from your account – and costs you money each time.
- Repeatedly charges you for each missed payment.
- Doesn’t tell you about help that’s available – like the FOS – they have to do this by law.
- Attempts to intimidate you or issues outright threats.
By their very nature, payday loans can become very expensive incredibly quickly. In fact, according to a recent Guardian article, ‘lenders know that many borrowers will never repay the loans’. Businesses such as Wonga are profit-making enterprises and the implications of entering a contract with them can be serious.
If you’ve had any problems like this, then get in touch with the Financial Ombudsman Service. Visit their website http://www.financial-ombudsman.org.uk/default.htm or call 0300 123 9 123.