Ed told us he’d fallen into a pattern of borrowing that had caused him serious problems.
What happened
Ed said he’d been borrowing from various payday lenders for a number of years – and now his monthly repayments were often more than he was earning.
He said that he’d complained to the lender about the 50 loans he’d taken out with them – but they’d said all the loans had all been offered responsibly. Ed didn’t think the lender had done enough to consider his circumstances before offering him money. So he asked us to look at his complaint.
What we said
Ed told us the loans he had taken out, and the trouble they’d caused, has had a major impact on his life. He said they’d exacerbated his mental health problems and been a factor in his being made bankrupt. He said he’d then lost his home and his access to his child, and he’d recently been made redundant.
Before starting to investigate Ed’s complaint, we could see he was in significant financial difficulties. He was in arrears with his rent and council tax payments and was facing potential prosecution and eviction. So we asked Ed if we could share the details of his current financial circumstances with the lender, who agreed to work with us to move things forward as quickly as possible.
The lender told us that if they had known about the problems Ed had been dealing with, they wouldn’t have continued to lend money to him. However, having looked at the history of Ed’s loans, we thought the lender could have done more to check on his ability to manage as his debt continued to escalate.
For example, Ed had often been taking out loans in quick succession. This suggested he’d been borrowing more to top up his existing loans, which had caused him to fall into a cycle of debt.
We thought that, after a while, the lender should have started to recognise this trend and check whether Ed’s borrowing was sustainable. If they’d asked more questions, we thought they would have realised that Ed was in a very vulnerable position and needed help.
Looking at Ed’s history with the lender, we thought that the lender could have identified Ed’s pattern of borrowing as problematic after he’d taken out his tenth loan. The lender agreed and offered to refund the fees and charges from all of Ed’s subsequent loans, after the first ten.
The lender pointed out that Ed hadn’t made any payments to his current loan. Although they’d agreed to waive the fees and charges, there was still an outstanding debt. And they wanted to deduct balance of Ed’s current loan from the money they were refunding to him.
We’d normally agree that it’s fair for borrowers to pay back the amount the borrowed. But in Ed’s case we pointed out to the lender that Ed had other debts that would have very serious repercussions if they were left unpaid. So, in these circumstances, we didn’t think it was right for the lender to treat Ed’s refund in this way.
Ed was happy with the outcome – and we put him in touch with both debt and mental health charities to help him improve his situation.