Lending Stream, a mid-sized payday lender in Britain, is noticeably bad at handling payday loan affordability complaints. This article looks at what often happens in a Lending Stream affordability complaint so you are prepared.
By taking your complaint to the Ombudsman you may get a much better award. In the first half of 2018, the Financial Ombudsman was agreeing with the customer in more than six out of ten Lending Stream cases. This shows that Lending Stream are not making reasonable offers even where it should be clear that the loans were unaffordable.
A loan is unaffordable if you can only repay it by borrowing more money, or not paying essential expenses. Here is how to send in an affordability complain and ask for a refund of the interest you have paid: How to ask for a payday loan refund – with template letters.
I think Lending Stream’s complaint handling is so bad that its regulator, the Financial Conduct Authority (FCA), should investigate it.
Putting in a complaint – you now can’t use email
In late 2018, Lending Stream invented a new way to be difficult. They have switched off the emails for their complaints department, making people submit complaints through their web form. See Lending Stream stops customers complaining by email for more about this.
Getting a list of your loans
You may be able to see all your loans in your online Lending Stream account, your password is often your birthday DDMMYYYY. If you can see the loans there, take a copy immediately as Lending Stream may delete them!
If you can’t access that, LENDING Stream will send you a list of your loans if you ask and they no longer try to charge people £10 for this. This isn’t because they have decided to be nice – it was made illegal in May for firms to charge a customer for a copy of their personal information.
Quoting absurd credit scores
Lending Stream sometimes tell people that their credit score was fine. But if they quote a score, it may bear no resemblance to your actual Experian score. Some examples:
adjudicator found in my favour for loans 4 to 42 over last 6 years. Lending Stream disagreed saying my credit score was 776. I don’t know how as I had three defaults at the time.
They also said my Experian credit report figure was 785. I have replied saying I was on a DMP since 2013.
So what is happening? Are they literally inventing these numbers? Lots of people complaining think they are!
When a case goes to the Ombudsman, if Lending Stream are challenged they usually explain that they don’t actually see the same credit record or score a customer can. That’s true but the Ombudsman is often very unimpressed with this. here are two examples:
LSL said that it was unaware of all of this at the time that it lent to Miss S. Although it was aware that she had eight loans with other lenders. It was also aware that the credit reference agency score indicated a poor credit history, which was no doubt a reflection of the fact that her mortgage was in sustained arrears and that she had defaulted on some accounts. Had LSL applied any meaningful consideration to the information it said was actually available to it, I think it should have prompted it to make further enquires.
Lending Stream says it doesn’t have full access to consumers’ credit files, and may have different subscriptions to the credit reference agencies – so would see less information. What subscription Lending Stream chooses to have is up to it. But if it means its credit checks may not be sufficient to give the proper picture, I need to look at what the proper picture actually was. There’s nothing I’m aware of to stop Lending Stream upgrading its subscription, but in any event, it could ask for further information if it feels it’s unable to glean enough from its credit checks.
So if Lending Stream tells you had a good credit score, just ignore this – it does not mean you have a weak case at all. And when you send the complaint to the Ombudsman, mention the problems on your credit record.
Making very low offers
Lending Stream sometimes makes quick offers, which sounds good. But the offers are often very poor.
There is no explanation of why those loans were picked – they aren’t the last or the largest loans often. They can seem quite random. Lending Stream just says the others were affordable – even if your situation was getting worse as the borrowing continued.
By late 2018 Lending Stream knows that the complaints where there is a history of borrowing every month for a long while will usually get much better awards from the Ombudsman.
The Ombudsman has published Technical Guidance that lenders are supposed to follow when they handle complaints. This makes it clear where there is a long “chain of loans” they should normally all be refunded after the lender has become aware there was a problem, not just have some loans picked at random for a refund.
Making a low and random-looking offer at the same time as quoting a very high “Experian credit score” is misleading people into thinking they have a poor complaint when they may well have an excellent one.
You won’t lose an early offer by going to the ombudsman
Don’t worry you may “lose” the offer if you don’t win the case at the Ombudsman. We have seen many of these complaints and no one has ever got less from the Ombudsman than was offered by Lending Stream! Here is one example:
I had a reply to say that they would refund me for the first five loans (I had 16 in total) I declined the offer and sent to the FO. I have had a response today from the FO who have advised they agree with the first five loans and have also found in my favour for loans 8 to 16.
Making an early rejection but not saying it is a final offer
In summer 2018, this is a very typical rejection letter that is being sent out:
We would like to highlight that Lending Stream conducts rigorous affordability assessments for all its customers on each and every loan application.
Between[dates], you borrowed [number of loans]. All loans were successfully closed. In-fact one or more loans were pre-closed before the original loan term. Below, we highlight the affordability checks conducted on each loan which was offered to you
· Where available, your stated monthly income, expenditure and disposable income were compared with the average monthly payments due on these loans at the time of approval. In some cases, as you took further loans, we also independently verified your income with third party sources
· In some cases, we used national averages for expense categories where data is available as a third party verification of your submission, and we revised upwards your total stated expenses while computing the disposable income
We hope the above addresses your query regarding affordability checks done on your loans
That doesn’t answer your actual complaint ( it wasn’t a query at all) which was about the non-affordabilty of the loans.
It suggests Lending Stream think your loans were affordable, but it doesn’t actually reject your complaint or tell you about your right to go to the Ombudsman… that is very poor complaint handling.
If you have got a reply like this, I suggest you ask Lending Stream if that is their Final Response as you will be sending your complaint to the Ombudsman. You don’t need to worry that your complaint is actually weak, that letter was completely standard, sent to everyone.
Objecting at every step of the way
When a case does go to the Ombudsman, Lending Stream is frequently very slow at responding and often seems to object at every step of the way. Although they do accept some adjudicator level decisions, there are many absolutely clear-cut cases which they insist on taking to the ombudsman stage.
Here is one example:
Sent complaint to LS in Sept 2017, they rejected after a few weeks but didn’t state it was final response.
Sent to FOS in Nov 2017.
Adjudicator found in my favour for loans 3-11 in March 2018 – interest and fees in the region of £1400…of course, LS rejected this and sent to Ombudsman.
Ombudsman agreed with adjudicator at start of July 2018.
Here is a case where even an unfailingly polite Ombudsman got a bit fed up:
Had it looked more closely at Mr F’s circumstances it should have easily realised he couldn’t actually afford all of the loans and it should have declined the applications. I am somewhat surprised that even after my provisional decision Lending Stream still considers it has acted reasonably.
Lending Stream often says the customer’s income was more than enough to cover the loan repayments, that it’s the customer’s fault as they were gambling, the customer should not have given inaccurate information etc.
But by now they have seen hundreds of these cases go through the Financial Ombudsman and they know these are not adequate excuses. Where there is repeat borrowing over a sustained period, the Ombudsman says that they should have looked more closely at whether they should continue to lend. As one Ombudsman summarised it:
Lending Stream knows they have a greater responsibility than the customer in the consumer credit relationship.
Two small bits of good news in 2018
- Lending Stream used to be appalling about dragging out payments, sometimes even beyond the 28 days they are allowed. In summer 2018 they have speeded this up and people are often receiving their refund within 10-14 days.
- Unlike many other lenders, they don’t routinely reject complaints about loans that are over 6 years old.
FCA should review Lending Stream’s complaints handling
The FCA says in DISP 1.3.3 that lenders:
must put in place appropriate management controls and take reasonable steps to ensure that in handling complaints it identifies and remedies any recurring or systemic problems.
I think the FCA needs to investigate Lending Stream’s complaints handling. Lending Stream needs to:
- allow customers to complain by email;
- stop misleading customers with its quoted Experian score, very poor offers and lack of mention of the right to take a case to the Ombudsman in early communications;
- adopt the same approach to answering a customer’s complaint that the Ombudsman would use, not try to settle cases by offering as little as possible;
- settle the clear-cut cases speedily. I’m not suggesting they have to give a refund to anyone that asks, but Lending Stream knows by now what a strong case looks like!
- conduct a trawl through its database to pick up customers who borrowed consistently over a long period and offer them an automatic refund;
- conduct proper root cause analysis from the affordability complaints to make better assessments of affordability before lending in future.
UPDATE – summer 2021
In May and June 2021, Lending Stream seems to be responding to complaints faster and making better offers. These are not always good enough, so some cases will still need to be sent to the Ombudsman.
The main payday loan refund page is now the best place to see how other people are getting on with their LS complaints and to ask any questions.
It also has the template letter for how to complain and details of how to send a complaint to the Ombudsman.
A large number of these complaints against Lending Stream are being won so it is well worth doing!