Customer Situation: Pattern of Irresponsible Lending

The world of loans and loan reclaims can seem like a maze to navigate, with a mass of information to absorb and digest, it easy to become daunted by the task. It can also be difficult to empathise with some of the situations where loans have reclaimed, as it’s hard to believe that we live in a world where these sort of situations happen, on a daily basis.

Sadly, many of the situations we feature are all too common for people. We are here to dispel those myths and uncover the facts around loans and being able to reclaim part of your loan, if you were in a situation where the loan was irresponsibly lent.

On the FOS (Financial Ombudsman Service) website, they feature case studies, demonstrating the real stories around loans and irresponsible lending.

Case Study on the FOS (Financial Ombudsman Service)

In this particular case study, the FOS looked into a complaint where a customer had been borrowing from various payday lenders for a number of years, and how 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.

Source: FOS: https://www.financial-ombudsman.org.uk/decisions-case-studies/case-studies/payday-loan-five-years-ago-now-cost-everything
A guarantor agrees to pay the borrowers loan, if the borrower is unable to

The FOS investigated the complaint and found that the lender had continued to issue loans to the customer, even though the pattern of his borrowing suggested that he had fallen into a “cycle of debt”.

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.


Source: https://www.financial-ombudsman.org.uk/decisions-case-studies/case-studies/payday-loan-five-years-ago-now-cost-everything

Irresponsible Lending can cause alot of stress and worry

The FOS concluded that the lender should have “recognise this (repeated borrowing) trend and check whether Ed’s borrowing was sustainable“.

The result was that the customer was able to claim a loan refund against the lender, and receive some compensation for some of his loans.


If you have experience a similar situation

The Reclaim Experts specialise in helping our customers to receive Loan Refunds for a variety of loans including Guarantor Loans, Payday Loans (short term) and Doorstep Loans. In simple terms this is claiming back money that you, the borrower, are entitled to, due to your leader not making the necessary checks before they gave you the loan.

If you have found that you were unable to pay the loan you could be eligible to claim compensation. Start your claim or get in touch with the experienced Reclaim Experts team who will guide you through the process. Visit this page to see whether you could be eligible to make an unaffordable loan reclaim.