Petition for the Financial Ombudsman Service to take action against Payday Loan companies to help protect the consumer sign now

Petition for the Financial Ombudsman Service to take action against Payday Loan companies to help protect the consumer.

Copied in the opening letter to FOS.

Dear Sir/Madam

I wish to issue a general complaint towards all Payday Loan companies which operate within the UK. I believe these companies target those in financial hardship and major debt problems, fully aware that the targeted customers are unlikely to be able to afford to pay them back in full on time. Interest rates seem to be in excess of 2000\% APR and can hit 3000\% and as the clients are likely already behind with many payments the chances of the client extending their loan is high. These extensions eventually accumulate interest to a point of saturation for the borrower and in many cases with no more options are forced into debt management, IVA or bankruptcy.

In many cases the people entering these loans are at a point of desperation where they feel that there are no other options available to them and will take out these loans without analysing the consequences as it satisfies their short term crisis. These loan companies will put cash into peoples accounts the same day and some within the hour making these loans far too easily accessible. This is causing many people to not actually explore much more sensible avenues like approaching their current lenders and asking for reduced payments ect.

Also these companies seem to be relentless when chasing payments that have fallen behind. I have read many reports on consumer forums like www.moneysavingexpert.com of people falling behind and receiving several phone calls a day with letters displaying details about their debt overtly also. There is many cases where customers of these companies are approaching the Payday Loan companies to arrange payment plans and them being refused even though the customer is offering the maximum they can afford in payments. Usually when a client is refused the Payday Companies alternative solution is to offer the customer a further loan to cover the loan already taken out, I do not call this responsible lending, do you?

I feel with the difficulties many families are facing at the moment that these companies are profiting on peoples misery. These loan companies often destroy lives and do not act morally or responsibly when lending. I feel it is ultimately the Financial Ombudsman Service to acknowledge the problems that these companies are causing for families in financial hardship and should take measures to at minimum tighten regulations but preferably outlaw them all together. I would recommend that by minimum Payday loan companies should not be allowed to payout any earlier than 5 working days after acceptance of application with the client having the option to cancel at any time without penalty during that time. I feel this would eradicate some of the impulsive borrowing brought on by people who feel desperate and would force them to explore all other avenues available to them first. If the client really is in need of money for basics like Utilities and food then they can approach the JobCenter plus instead for a crisis loan.

I have posted this letter on a consumer forum and have set up a petition of which I hope to deliver to you once we have 50,000 names. Please take action now before many more lives are ruined by these companies.

Kind Regards

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Meagan HickmanBy:
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Financial Ombudsman Service

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