Loans - Excessive interest rate
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If your application is rejected, you need to understand why. Was it because of an error by the bank or building society? If so, you should make an official complaint; make sure to explain the issue, including why you feel the rejection is unfair. If the company does not address your issue, you can escalate your case to the Financial Ombudsman Service.
Other reasons for an application being rejected include:
- Poor credit history
- Not being registered to vote at your current address
- Too many credit applications
- Too much outstanding debt
- Payday loans since 2011
- Insufficient earnings
- Not matching the lender’s customer profile.
You should know
Any lender is obliged to treat you reasonably. If you feel that any action has been unreasonable, you have the right to complain.
If you have a complaint with a lender, you can use Resolver to raise and manage the complaint. Financial organisations are obliged to handle your complaint when it is submitted via Resolver. If you are not satisfied after eight weeks, Resolver will remind you that you can escalate your complaint to the Financial Ombudsman Service.
Check your credit file
Your credit file will determine the rates that you might be offered as a loan. You can check your credit file from the Credit Reference Agencies (Experian, Equifax and Callcredit) for £2.00.
If you have a secured loan and you cannot afford to repay it, your home is at risk. If you are having problems paying the loan, the provider can apply for a Time Order. This is a special order from the courts that gives you time to pay, helping ensure that you can keep your home even if you are struggling to repay the loan.
Cancelling a financial agreement
You cannot cancel a bank overdraft, a secured loan or a mortgage.
Paying off a loan early
If you pay off more than £8000 in any 12 months the lender might charge you compensation, but this charge is limited by law.
Even though you have asked for an early resettlement figure you do not have to pay off the loan at this point.
You can also do a partial loan resettlement: your rebate will be less than when paying off the full loan, but it might reduce the amount of your repayments, or the length of the loan term.
If you are struggling with repayments
If you are struggling to pay for your loan, your lender will send an arrears notice and an information sheet from the Financial Conduct Authority. Before it can recover any owed monies, it will need to give you a default notice. It needs to have sent you the right information to take you to court.
If you are struggling with any repayments, you should contact the Citizen Advice Bureau as soon as possible for assistance.
Reasonable & fair
All financial organisations in the UK are required to treat you fairly, and to ensure that their actions are reasonable. These are the key principles for any financial product, so ask your friends or family member for their opinion on whether you have been treated fairly – this is a good way to determine if you have a reasonable complaint.
Discrimination is unacceptable as part of the reasonable and fair approach; if you have experienced discrimination, you have the right to make a complaint.
Should I use a Complaints Management Company?
Claims Management Companies (CMC) will handle a complaint for you in certain areas, such as Payment Protection Insurance (PPI). A CMC will charge you a fee, which is often between 30% and 40%. However, following the complaints process is something that can be done yourself, and it is unlikely that you will get a better result from using a CMC than by going directly to the company yourself.
Raising a complaint
If you have a complaint, first ensure that it is reasonable; if you believe that it is, you can use Resolver to submit your issue. Any complaint from Resolver is an official complaint, and the lender is therefore obliged to act upon it; if it’s not resolved, you can take your case to the Financial Ombudsman Service.
In your complaint, ensure that you state your issue clearly and concisely, give information about when the problem happened or began, and say how you would like it to be resolved.
Managing your case
During your complaint you can use Resolver to manage your issue: you’ll be able to upload documents, store emails, set reminders and make notes about your case so that you have a complete file to send to the ombudsman.
If your issue is not resolved
If you feel that your issue has not been addressed, resolver will remind you when you can escalate your case to the ombudsman: this is possible after eight weeks.
From which date can I make a claim?
The statute of limitation in England and Wales is six years; in Scotland it is five years. In theory you can make a claim that dates before this, but the probability of winning is considerably reduced.
You must also contact the Financial Ombudsman Service within six months of your last communication with the financial organisation.
Financial Ombudsman Service
The Financial Ombudsman Service will independently assess your case. There is no charge to the consumer for the assessment, but you must wait eight weeks before you can take your case to the ombudsman.
Can I claim for time and hassle?
There is an award in a quarter of cases that are assessed by the Financial Ombudsman Service. The compensation guidelines state an allowance of £50 to £100 per day, and no more than £10 per hour. Be sure to keep records of the time that you have spent handling your case.
Financial Ombudsman Service decision
The ombudsman will make a decision on your case and provide an outcome that is binding on the company. You can choose whether to accept the decision.
If the decision is held in your favour, and you are awarded financial compensation that relates to miss-selling, you will be awarded interest at 8%. This is not compound interest, so you will not receive interest on the interest.
If you are still not happy
The final option would be to take the bank to court; you should get expert legal advice before taking this route.
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