Pay Day Lenders | Impact on Credit file

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

Afternoon,

Here is my draft response to the FCA. Is there anything else I should add?

Basically I want to get info from them to support the position that taking a PDL has a negative impact on lending.

Thank you for your email, I apologise for the delay in responding to you.

Thank you for your offer of a meeting, something which I am interested in, however it may be that you can provide me with further information via this process without the need for a meeting although I might like to take up that offer.


I fully appreciate that individual pay day lenders cannot be identified in this response, what I am looking for specifically is within the press release it states “claiming that their product would help repair credit ratings”. Essentially I would like the background to that statement.


1. Were these claims found on Pay Day Lenders websites TV advertisements or claims sent by e-mail?
2. How many Pay Day Lenders were found to be making these claims?
3. Has the FCA obtained evidence or information that these claims are unfounded or made without merit?
4. Has the FCA carried out or obtained research about these claims? If so can this be provided?
5. Is the FCA carrying out any enforcement action against Pay Day Lenders in relation to these claims?

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

I know a number of 'subprime' credit cards claim to help repair credit files as well, I haven't kept that much of an eye of the PDL advertising to know how widespread the statement is/was. I'm pretty sure it will be mentioned in the high cost short term credit investigation docs though.

Specifically on this point I am due to get some interesting information in the next couple of weeks from the FCA, their research was on credit card companies, they want to talk about how this could apply to PDLs.

[PAWS]

Re: Pay Day Lenders | Impact on Credit file

Wow orfoster! Well done getting an offer of a meeting –you star! Believe me it is not usual so you must have impressed them with your letters etc. Therefore you need not be worried you won’t have the right questions if you have already got that far! :hail:
Many of the adverts associated with these scumbags is misleading but it is a sorry fact that if you get credit and keep up the payments it does improve your score. Good old Martin Lewis wrote a piece about it:
http://www.moneysavingexpert.com/loans/#rebuild
It is probably the only thing on the Wonga advert that was true!
People with a bad credit record find that getting a sub-prime credit card or loan and building up a good repayment history raises their credit score even if it is littered with defaults. People with no credit history at all often have a lower score than those with a few late payments from a few years back.
I had better not go off on one of my rants about how our credit records are maintained and marred!!!:yell:

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

Hey Paws,
Thanks! My meeting is with a senior person in the Financial Promotions team so I'm taking everything I have with them to talk to them that I've got.
Basically it stems from the fact I've now researched and discovered that some and increasingly most lenders won't look at you if you've had a PDL in the last couple of years, so while you have a good repayment history, now that CRA's list these loans separately as 'advance against income' or 'Pay day loan' lenders can search based on that criteria and decline you for credit. Something which the FCA has now identified as an issue, so fingers crossed.

Wonga remind me the FCA only have enforcement powers from 1 April 2014, they don't deny their info not being accurate on their website, simply that they don't believe the FCA can act, Wonga have changed their website slightly since but they still make the claims, the same as other PDLs.

You see Credit Cards are ok, they are all categorised the same so your file can't be discriminated against for those purposes.

I'm excited and nervous about the meeting! I've also heard from Watchdog!!!!

[PAWS]

Re: Pay Day Lenders | Impact on Credit file

Basically it stems from the fact I've now researched and discovered that some and increasingly most lenders won't look at you if you've had a PDL in the last couple of years, so while you have a good repayment history, now that CRA's list these loans separately as 'advance against income'or 'Pay day loan' lenders can search based on that criteria and decline you for credit. Something which the FCA has now identified as an issue,

Are you serious –wow. That is vile.
You go for it; it is hard to say more without sounding patronising but stuff like this is so encouraging. I’ll give your star a wallop(that sounds a bit like a euphemism)!!!:clap2:

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

Are you serious –wow. That is vile.
You go for it; it is hard to say more without sounding patronising but stuff like this is so encouraging. I’ll give your star a wallop(that sounds a bit like a euphemism)!!!:clap2:

Why thank you.

I am currently compiling all of my 'stuff' to take to the FCA and have e-mailed the CAB CEO tonight to ask if they hold any info that could be of use (you never know).

I'll report back how the meeting goes of course....

If anyone has any information about being declined credit simply because of a PDL please let me know.

[PAWS]

Re: Pay Day Lenders | Impact on Credit file

Oh no need to thank me but you are very welcome.
I am absolutely gob-smacked at what you have discovered. I am always complaining about how credit records are recorded and used. It is no longer about protecting the lender and more about punishing the debtor but I had no idea this was going on!
Do you know what annoys me; the ‘so called’ approved lenders and their one dimensional treatment of debtors ensure those in crisis have nowhere else to turn for emergency finance. The debtor takes out the ‘sub prime’ debt and then in the future the lenders higher up on the food chain discriminate against the debtor when they see such a debt on their credit file even if they have a good repayment record. So…. back they go to the scumbags.
It is the whole circle of debt and bad credit ratings that people cannot get out of. Slip up once and you are doomed.
I am sure you will have hundreds of LB members rooting for you.:cheer2: Good luck, keep us posted and if there is anything I can do just shout.

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

Thanks, I will let everyone know how I get on. It should be interesting.

Meeting confirmed today with someone quite senior in FCA.

[Amethyst]

Re: Pay Day Lenders | Impact on Credit file

Well despite using a lot of CRA data in the FCA report on introducing a price cap and a lot of discussion on real time cra data sharing for HCSTC they haven't mentioned the affect on peoples credit files.

If having had a PDL in the past 6 years - even without any late payment or defaults - is causing a flag to mainstream lenders and causing them to turn down credit - it keeps people in the HCSTC zone - which is what they are trying to avoid. So it is important that it is discussed.

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

I met with the FCA last Tuesday in their massive offices near Canary Wharf. I met with their Financial Promotions manager, an Enforcement Manager from the Pay Day Lending Team and a Press Officer.

We went through all of the evidence I'd compiled, interestingly their Press Release I mention earlier in this thread was simply around the fact 2 Credit Card Companies advertised on their websites that by simply "having a card will improve your credit file", the team felt that on balance this was inaccurate because actually you need to repay the card substantially each month to show a good repayment history, makes sense to me. So they wrote to the lenders who changed their websites.

They said they found these websites using an external company who undertake research for them.

They also said that because they'd not been dealing with Consumer Credit for very long, they had a lot to do following research, they said my example and evidence was very interesting and they hadn't had anyone bring this to their attention and thats why they agreed to meet with me.

They couldn't tell me if they would actually investigate my complaint if I formally reported it to them but cited the fact they have taken the time to meet with me, what they can't do is provide any outcome to my investigation.

So, anyone who has been turned down for a mortgage because of simply having a Pay Day Loan and if that company advertises on its website, or did at the time, that having a PDL may improve your chances of obtaining credit can report this here http://www.fca.org.uk/consumers/prot...reporting-form. You'll then get a reference number and an email address where you can send supporting documents.

I haven't yet had the time to bundle all of mine together.

Hope this is helpful.

[PAWS]

Re: Pay Day Lenders | Impact on Credit file

Hey! Good going. By bringing this to their ‘attention’ you have certainly helped get the ball rolling on squashing another bad practice.:high5:

couldn't tell me if they would actually investigate mycomplaint if I formally reported it to them but cited the fact they have takenthe time to meet with me, what they can't do is provide any outcome to myinvestigation.

Well there is only one word I can think of and as it’s a Sunday……:tape2:

they said they found these websites using an external company who undertake research for them.

Sorry; WTF! Can they really not justify having an in-house research team! It’s not as if there is not a lot of investigating to do and surely it would be more cost effective.

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

Ok, it's been a while since I updated this thread but I am keen to progress this issue.

So, as I think I mentioned, I met with the FCA in June who were interested in the issue, I haven't done anything since.

Taking Wonga forward I attach their response to the FOS which makes interesting reading in that they still assert a conga loan will improve your credit rating, I will upload their Terms & Conditions shortly as well.

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

Wonga Terms & Conditions state;

Where you borrow from us, we will give details of your loan(s)/account(s) and how you manage it/them to CRAs.If you borrow and do not repay in full and on time, CRAs will record the outstanding debt and, in some cases, the length of time that the debt remains outstanding. This information may be supplied to other organisations by CRAs and FPAs to perform similar checks and to trace your whereabouts and recover debts that you owe. Records remain on file for 6 years after they are closed, whether settled by you or defaulted.

Attached are their full terms and conditions.

[orfoster]

Re: Pay Day Lenders | Impact on Credit file

UTCCR's State; http://www.legislation.gov.uk/uksi/1...ulation/5/made

Unfair Terms

5. (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

Unless someone shouts at me, surely if they state on their website their loans improve your credit status and have detailed that in writing to me and the FOS but not provided any evidence, the terms allow them to share information but could a clim be brought on the basis of the above?