Blue Letter Loans

Update: In February 2018, Blue Letter went into liquidation. They are no longer engaging in lending activity.

Information correct as of 22/04/21 (CompaniesHouse)

Who are Blue Letter Loans?

Blue Letter Loans used to be a registered loan provider in the UK. However, they are now in liquidation and is no longer accepting loan applications.

Government cap on loan interest and other charges

The Financial Conduct Authority put price caps in place to protect borrowers from facing excessive charges. These include:

  • A cost cap of 0.8% per day on the amount borrowed – including all interest and fees charged.
  • A cap on default fees of £15 – interest may be charged after a default, but it must not exceed the original rate of 0.8% per day.
  • A complete cost cap of 100% – you should not be asked to repay more than 100% of the money you have borrowed.

The price caps apply to all credit agreements with an interest rate of 100% or more per year and that will either be fully or substantially repaid within a year.

There are other regulations which came into force in May 2017. They now must provide details of their products on a price comparison website authorised by the FCA and borrowers must be provided with a summary of the cost of borrowing.

What are the new rules regarding Continuous Payment Authority?

Borrowers are usually not aware of this, but most loan companies get you to repay the loan using a Continuous Payment Authority. With a CPA, the company have the right to take money from your account at any time to cover the loan repayments.

There are new regulations which have been put into practice to protect borrowers. With these regulations, lenders must not attempt to take payments on more than two occasions. If the payment fails, they must not try again.

Other rules are related to the amount of money lenders can take using a CPA. They must not take partial payments to cover the debt, only full payments are permitted. This means that if you don’t have enough money available to cover the full payment, they must not take anything at all. You can make an agreement with them to take partial payments, but otherwise, they must not take anything other than the full payment.

Are you unable to pay back the loan?

There are some rules which lenders must adhere to, according to the law:

  • They must provide you with information on where to obtain free independent debt advice.
  • They should hold off debt recovery for a reasonable period and give you a chance to develop a repayment plan. This may include using a debt advisor.
  • Give you a reasonable period of time to repay the debt, including freezing interest and additional charges wherever possible.

Are you looking for free debt advice?

These are some of the organisations that can offer you free independent advice on debt:

References

CONC 2.1 Application

CONC 5.2A Creditworthiness assessment

CONC 13.1 Application

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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