Mr X has received a reply from QuickQuid saying why it will not consider an affordability refund on payday loans that are more than six years old.
This part of QuickQuid’s reply isn’t related to the details of Mr X’s case. It looks like a standard response QuickQuid is sending everyone whose complaints include these older loans.
I often see pretty poor replies from payday lenders to people making affordability complaints. But this issue is important for two reasons:
- it affects a large number of people; and
- QuickQuid’s reply seems to be so misleading.
What QuickQuid wrote – and my comments
Here is what QuickQuid wrote (in blue) and the reply I would make to them.
My replies are based on the two decisions by the Financial Ombudsman (FOS) this month on whether it can look at payday loan affordability complaints about loans that are more than six years old, see Ombudsman decisions on payday loans over 6 years old for more about these FOS decisions.
QQ: There has been widespread media coverage since the financial crisis in 2008 which has made it very clear that it is wrong for financial organisations to lend irresponsibly or to people who cannot afford it. Said media and press coverage includes 2013 parliamentary findings; hefty fines imposed on lenders such as Wonga; the FCA’s findings after completion of our own Section 166 review; the regulatory rule changes in 2014 which received press coverage; etc. X ought to have been reasonably aware that companies were not permitted to lend irresponsibly or in defiance of regulatory requirements.
My comment: In Mrs W’s complaint FOS considered very similar points in detail and rejected them. It concluded that:
“The fact that these publications were in the public domain and so, in theory, accessible to Mrs W doesn’t … necessarily mean that she ought reasonably to have been aware of them and read them. Nor does it automatically follow that consumers ought reasonably to have realised they have cause for complaint from that kind of generic information”
QQ: The loans were designed to be very short-term. The customer was required to pay via monthly installments, and therefore, if the lending was unaffordable at the point of sale, we would have expected X to recognise this very quickly. Even if a customer did not realise their complaint at the time of inception of the loan, they certainly should have realised it sometime before now.
My comment: FOS also rejected this point saying:
“I’m satisfied that Mrs W ought to have known from the frequency and amount of her borrowing, combined with her financial situation at the time … that these loans were unaffordable shortly after they were taken out (if not at the time of the borrowing itself). But I do not consider that having this knowledge (that the loans were unaffordable) means that Mrs W ought to have known that she had cause to complain at this time.”
QQ: We are mindful the ombudsman service may take the view that the customer should have been reasonably aware of this complaint during the term of the agreement, which is in line with the previous FOS judgements we have reviewed.
QuickQuid is suggesting that FOS may take a view in X’s case that is the opposite of the views FOS took in the two recently published cases. QuickQuid doesn’t mention any specific reason why Mr X’s case would be different so I think it is misleading to suggest that FOS may take a different view in this case.
And the reference to “previous FOS judgements we have reviewed” – I think these were before August 2016, when 6 year loan cases were placed on hold whilst FOS looked into the jurisdiction arguments in detail. FOS answered a similar point in Mr H’s complaint where the ombudsman’s decision was: “I agree that consistency in approach is important. But I am not bound by that earlier decision”.
I think this was a misleading reply from QuickQuid
- QuickQuid has told a customer complaining that it will not consider refunds on loans over 6 years, citing various reasons;
- QuickQuid knows from the two recently published decisions that FOS says it can look at older loans in some cases;
- in these two cases FOS considered and rejected similar reasons to the ones QuickQuid has mentioned in its reply to X;
- FOS published these two cases in the technical section of its website which sets out FOS’s usual approach to common situations;
- the FCA’s DISP rules say that lenders have to learn from FOS decisions. This week the FCA has said specifically that payday lenders should take these two FOS decisions into account. See Dear Payday Lender CEO – should you start a redress program? for my thoughts on this FCA letter.
I think QuickQuid’s reply was so inaccurate as to be misleading. Some customers may give up on good complaints after reading a reply like this.
How should QuickQuid put this right?
First QuickQuid needs to stop using this misleading language on all existing and future complaints. It needs to incorporate the older loans in its decision-making process, not rule them out.
It should also review all previous complaints involving loans over six years which were not then taken to the FOS. For clear-cut cases, QuickQuid should now offer them redress.
For complaints where QuickQuid still does not feel redress is warranted, it should write to the customer to say that it would like to draw the customer’s attention to recent FOS decisions about loans over 6 years old and to say that, although it is not changing its decision, it will allow customers to take these cases to the Ombudsman even if QuickQuid’s original reply was more than 6 months ago.
What if you get a reply like this from QuickQuid?
If you get a reply from QuickQuid that sounds like the one Mr X got, I suggest that you should ignore it and send your case to the Financial Ombudsman.
This isn’t the only QuickQuid issue…
If you had loans after March 2015, QQ has been refusing to refund any of those either. Anyone would think they were trying to refund as little as possible! See QuickQuid’s refusal to refund loans after 2015 is wrong for a new Ombudsman decision on these recent loans.