Hi everyone, me again....thoughts please.
Thank you for your correspondence of 28 March 2016, please accept our apologies for delay in issuing our response.
We have investigated your complaint and our findings are set out in more detail below.
Our Understanding of Your Complaint
You have stated:
“In the period between 19th July 2012 and 1st July 2013, I took out a total of 23 loans in total amounting to £6614 before your interest and charges were added on. I had been borrowing more frequent and greater sum of money as time went on. These payday loans trapped me into a debt spiral, with the loan repayment taking a huge chunk out of my wages, so then I had to borrow again from you[(or Quick Quid)to cover my next month’s living expenses.
For this period my income averaged about £1200 a month at most. My living expenses varied at the time, however a huge amount was needed to repay previous creditors/CCJ’s which were lodged against me at the time.
This shows that there was no way I could afford these loans. When I repaid them, I had to borrow more to survive the next month. And by the end the interest repayments had mounted so I was often having to borrow more. You should have realised from my loans that my debt problems were getting worse.
You should also have been able to tell this from my salary and my credit reports which showed you the other borrowing I had and my debt problems. So you should never have given me these unaffordable loans. I would like to ask you to refund me the interest and extra charges you added”.
In investigating your case, we have considered the affordability of your loans based on information available to us at the time of application. That includes your personal circumstances, the value of the loans and top ups against your stated income, the frequency of your borrowing and any other factors which indicated financial difficulties as a result of the loan, such as arrears and repayment arrangements.
Before approving a loan, we carry out a credit reference agency check. This information is available to us from CallCredit and Experian and can be accessed instantly by us when we receive a loan application. When you applied, we combined that data with the personal data you provided to us including salary, employment, marital status, dependents, home ownership status, motor owner status amongst other information, and we also considered your repayment history. All of this information was entered into our underwriting system which uses an advanced algorithm to underwrite the loan as well as carry out an assessment of affordability. You achieved an acceptable underwriting score and the loans were approved on that basis.
You have told us you have taken a loan with another lender in order to repay your Wonga loans. If you are struggling to repay that loan, we would encourage you to get in contact with your lender to discuss your circumstances with them. They will be able to put in place a suitable repayment plan in order to help you to repay in a sustainable way. You can also get free debt advice from a number of organisations including:
· Step Change Debt Charity - 0800 138 1111
· National Debt Line - 0808 808 4000
· Citizens Advice - 03444 111 444
You have referred to the interest charged, our website and customer journey is designed to provide customers with all the information they need to make an informed decision about whether our service is appropriate for them. The “sliders” on the homepage allow customers to work out the exact costs upfront of the amount they would like to borrow for the term they select. Each time you took a Wonga loan, you were also presented on screen with a loan agreement, terms and conditions, Standard European Consumer Credit Information Document and a Loan Explanations document before accepting the loan. These documents were also sent to you by email. You were offered the opportunity to consider the documents and encouraged to read them carefully before accepting the loan, and you confirmed that you had done so. The documents set out the interest rate and the consequences of any failure to repay the loan on the promise date, including the default fee. You were therefore aware of that interest and charges which applied to your loan and accepted the terms of the loan before you entered into the agreement.
Having looked in detail at your loan history, we see all of your loans were repaid in full and on time, there were no defaults, arrears or repayment arrangements, and the amounts you borrowed represented a reasonable portion of your stated income.
However, some loans may have been unaffordable in their specific circumstance as they were taken in the same pay period as other loans, and when considered collectively they were high in comparison to your monthly income.
Based on the above, there may have been more that we could have done to assist you in relation to the loans identified and so we have decided to uphold your complaint relating to those loans.
Additionally, we will also request for the redressed loans to be removed from your credit record. This may take up to 30 working days to be updated fully on your credit file.
We would like to offer £47.85 which is an amount equal to the interest and fees on the following loans:
Interest and fees
Interest of 8% simple per year has been added to the total redress for each loan from the date the loan was taken out until the date of calculation. Please see the outline below.
interest and fees
8% interest net
8% interest gross
basic rate tax deduction
Compensatory interest is subject to income tax at the basic rate under UK tax legislation and, therefore, tax will be deducted at the basic rate of 20% from any payments made to you. If you do not pay tax, you may be able to reclaim some or all of this tax reduction from HM Revenue and Customs.
If you are a higher rate or additional rate tax payer, you may have to pay additional tax on the compensatory interest via your tax return. Please see HMRC.gov.uk for more details.
If you choose to accept this offer it will be in full and final settlement of your complaint. Please let us know if you wish to accept this offer by emailing firstname.lastname@example.org or by calling us on 0800 316 6745.
As we have migrated to a new system we no longer hold your previous bank account details. We would be grateful if you could therefore provide us with proof of your banking details. This can include a screenshot of your account statement, but will need to show your name, the sort code and account number.
This is our final response, however if you are not satisfied with it, you have the right to refer your complaint to the Financial Ombudsman Service, free of charge but you must do so within six months of the date of this letter.
If you do not refer your complaint in time, the Ombudsman will not have our permission to consider your complaint and so will only be able to do so in very limited circumstances. For example, if the Ombudsman believes that the delay was as a result of exceptional circumstances.
For more information on the Financial Ombudsman Service, please see the consumer information leaflet found at: http://financial-ombudsman.org.uk/publications/consumer-leaflet.htm. If you want a hard copy of the consumer information leaflet, please call us on 0207 138 8330.
The address of the Financial Ombudsman Service is:
The Financial Ombudsman Service