Can you get a refund of interest on doorstep loans?

If you had doorstep loans from lender such as Provident, you may be able to get a refund of the interest you paid if the lender should have realised the loan was unaffordable for you.

Doorstep lending – also called home credit – is where a collector comes to your house to collect the repayments.  Doorstep loans are used by over 1.3 million people in Britain. The four largest lenders are Provident (includes Greenwoods), Morses Club (includes Shopacheck), Mutual and Loans At Home.

What is an “unaffordable” doorstep loan?

The regulator says that a loan is unaffordable if you couldn’t make the repayments without borrowing again. This could be borrowing from the same lender, from someone else, getting deeper into your overdraft or by not paying a bill such as a utility bill.

So even if you always paid your Provident loan on time, it could still have been unaffordable.

If the lender should have realised the loan was unaffordable they shouldn’t have given it to you – that was irresponsible lending and you should get a refund back of the interest you paid.

With doorstep lending complaints you don’t usually get a refund of all your interest, the common award is a refund on interest on the last few loans.

You are very unlikely to get a refund for only one loan. But if you borrowed several times and especially if you took out a new loan when you were having problems paying an existing one, then complain.

How to complain about doorstep loans

For the last 18 months, lots of people have been getting large refunds from payday loans, see How to ask for a payday loan refund. The good news is the process is exactly the same for doorstep loans – the regulator’s definition of affordability is the same for all sorts of lending.

And now people are having success with complaints about doorstep loans – see the comments at the bottom of this article!

That article has template letters for complaining and it describes what you need to do and when to take your case to the Financial Ombudsman. You can use the payday loan refunds template letters – just delete the word “payday”! But also read the following Special Points…

Special points for Provident and other doorstep lenders

Here are some points that often crop up with doorstep lending.

If any of these happened to you, add a similar sentence to the standard payday loan refund letter:

• “My collector said I needed to change some things on my application otherwise it wouldn’t be approved”;
• “My collector filled out the application and gave it to me to sign, I didn’t have time to read it”;
• “I told the collector I had lost my job and she offered me a new loan to tide me over”;
• “When I asked my collector if I could pay over a longer period, he said I couldn’t unless I took a new loan”;
• “I have borrowed from you continuously for four years. Every time I cleared some debt, I was offered top ups”;
• “I missed several payments but you kept lending me more”;
• “For the first loan my collector looked at my payslip but after that he never checked and never asked if I was getting the same money – I wasn’t.”

Contact details for doorstep lenders

Include your customer reference number if you had one. Explain if you have moved address or changed your email so they can locate your account. Keep a copy of online complaints or letter sent – if you email it to yourself it’s easy to pass on to the Ombudsman if needed.

• Provident Use their online form: complaints to Provident and copy your complaints letter into the “message you want to send us” box. (Same for Greenwoods).
• Morses Club You have to write to them, see complaints to Morses. (Same for Shopacheck).
• Loans at home email with COMPLAINT in the title to customerservice@sd-taylor.co.uk.
• Mutual email to complaints@mutual.uk.com.
• Short Term Finance (Birmingham) Use their online form and copy your complaints letter into there: complaints to Short-Term Finance.
• Naylors Finance email with COMPLAINT in the title to admin@jrnaylors.com.

How good is your complaint?

The more loans you had, the better your case. Borrowing for prolonged periods by taking out new loans or refinancing existing ones shows you were dependent on the loans.

The larger the loans became, the better your complaint is. The first few loans may have been affordable but if they kept going up, that is a sign of increasing trouble.

Some people have had Provident loans for a very long while. You will not be able to have a complaint about loans before 2007 considered.

If you think you have a good case, don’t be put off if the lender rejects it. People are winning these cases at the Financial Ombudsman. The payday loan refund link above describes how to send your complaint to the Ombudsman, what details to include etc.

If you are offered a small amount, don’t worry you will lose this offer if you go to the Ombudsman. We have never seen this happen.

What will the Ombudsman say?

Read What happens at the Financial Ombudsman for an overview.

You can take cases with doorstep loans more than 6 years old to the Ombudsman. The lenders may say they haven’t kept the records of the credit checks for these older loans … but they don’t seem to be very good at producing the records for the more recent loans either!

You probably won’t get a refund back of all the interest you paid – most refunds given are for your more recent loans. But ask for it all and let the Ombudsman make the decision about where your loans became unaffordable. You don’t have to calculate and ask for an amount.

Some things worth saying to the Ombudsman:

You had a poor credit record

It’s worth emphasising if you had a poor credit record, especially if it got worse as you carried on borrowing from the doorstep lender. Get a copy of your free Noddle report – this will show defaults and missed payments going back 6 years. Send that to the Ombudsman with your complaint. Don’t wait to be asked for this, send it straight away.

Did you “refinance” loans?

It is also worth emphasising if you repaid some loans early because you borrowed more that month from the same doorstep lender. This is sometimes called “refinancing” your loan.

In this case you may have paid more in interest that you would have if you had just been given an extra loan because of the way the “early settlement calculation” were done. If this wasn’t explained to you by your agent (and I bet it wasn’t!) then you paid more interest than you should have.

Who suggested you borrow more?

It is also worth pointing out to the Ombudsman if it was always your agent suggesting you borrow more, perhaps because it was getting near to Christmas, or in August when you might need more money for new school uniforms, or because you had paid off a lot of a previous loan.

The FCA (the lenders’ regulator) said in a report (it’s long – look at page 32) in May 2018:

“Section 49 of the Consumer Credit Act 1974 (CCA) prohibits the canvassing and soliciting of cash loans off trade premises where this is not done in response to a signed written request made on a previous occasion.”

That means a lender such as Provident should only have offered you a loan if you had asked them in writing for it, they shouldn’t have sat in your home and offered new loans. So if this happened to you, mention it in your complaint to the Ombudsman.

Describe what happened with the loans

It’s important to try to show the links between your loans if there were a lot of them. Something like this can explain your case:

I took loan 2 out as soon as I repaid loan 1 and it was for a larger amount. I then took out loan 3 whilst loan 2 was still going. After a few months I couldn’t afford the payments so my collector suggested I took out a loan to repay off the loans 2 and 3 and spread the repayments over longer. So loans 2 and 3 were repaid early only because I borrowed more. etc etc.

Send your bank statements

Send your bank statements with your complaint. If you haven’t got them all, send ones you do have and set about asking your bank for the rest, then send those. You are more likely to win a complaint if you send them. Don’t wait to be asked!

Don’t be worried because your bank statements show a lot of gambling. Read Gambling and payday loans complaints for examples of how the Financial Ombudsman handles this sort of case -it is hardly ever a problem.

What about your current loan?

If you are still repaying a doorstep loan, you can still complain. If you tell the doorstep lender you want a payment arrangement, they should allow you to pay less each week over a longer period without adding any more interest.

But if you have other problem debts as well, talk to StepChange and they can see if a debt management plan would help. You can still complain if you are in debt management.

Need some help?

Your local Citizens Advice can help with writing these complaints, that will be free.

You don’t need a lawyer or a claims company. They take a LOT of your refund and you can make a better claim on your own than they can. A good claim involves telling your own story, you know it and a claims company doesn’t!

Comments or questions?

Hundreds of readers have posted comments below about how their Provident complaints are going and the successes they have had. If you have a question, ask it here!

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