Politicians challenge street lenders over repayments
Some UK politicians and financial figures have raised concerns about the historic loan repayment process.
Two of the UK’s biggest lenders are currently repaying thousands of customers for poorly sold loans on the grounds that insufficient accessibility checks were carried out.
Amigo Loans and Provident are two of the UK’s largest operational consumer credit lenders, both facing high compensation bills from old debts that have struggled to repay their loans on time. The applicants argued that the loans were non-repayable or led to ‘further debt spirals’.
Both lenders operate in the subprime lending industry, helping those with less than perfect credit scores, with Amigo requiring clients to add a guarantor to their loan application for additional security.
To date, Amigo has already handled over £ 50 million in complaints, either through those submitted directly by customers or through the Financial Ombudsman Service.
Last month, it was announced that Amigo aims to repay around 5% to 10% of the unpaid compensation owed to its former clients, which they say is imperative to avoid administration – and it hasn’t. been challenged by the regulator, the Financial Conduct Authority. .
Paying a fraction of the unpaid compensation bill is designed to protect shareholders and many will receive bonuses if the company recovers and is profitable in the years to come.
Labor MP Stella Creasy said if they allowed the deal to pass, the government and regulators’ would set a precedent that it’s okay for a business to go bankrupt and not reimburse consumers, but make sure you that he takes care of his shareholders and bondholders ”.
Creasy often denounced the dangers from above–cost of loan products – and fears that a soft approach against Amigo will give Provident the same green light to pay a fraction of the repayments owed to potentially 379,000 of its customers.
“This is not the right solution when the reason they go bankrupt is that their business model is to exploit consumers,” she said, stressing that the government had to intervene urgently.
The founder of Money saving expert, Martin Lewis, said the regulator must use its powers and stand up for consumers. “I invite the FCA to intervene, to ensure that a fair and proportionate balance of Amigo’s available money for repairs is returned to customers, who have often seen their lives very difficult by being wrongly sold,” hideous, costly over-loans. “
In 2020, payday loan giant Wonga.com paid just 4.3% of the value of repayments owed to its former customers, moving to administration in the process.