Are you being threatened by Blue Letter Loans UK about an outstanding loan? Do you have loans that you can’t afford to pay back? Are you receiving threats from Blue Letter Loans UK, including court action? Was the loan unaffordable and you should never have received it? If these issues sound familiar or you are facing other issues with Blue Letter Loans UK, this article should offer some help. You might be able to cancel your loan and even obtain a refund.
It’s not your fault. Complaints to the Financial Ombudsman have risen this year from 830 to 2,006, so it’s safe to say that you’re not alone.
Deal with your debt today and feel better tomorrow.
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. The company did allow customers to borrow up to £12,000.
Read what to do if you can’t pay back your debt.
Why do loan companies lend to those who can’t afford it?
Unfortunately, many lenders make it far too easy to borrow money. There are companies who promise to give borrowers access to cash in just minutes, or promise to approve a loan in seconds. They may even offer the loans without undertaking any credit checks. As you can imagine, this just plunges borrowers even further into debt. They may already be struggling with debt, and this can prove to be too tempting to resist.
How do you end up with debt problems, and what are the government doing?
When you consider that lenders are offering money to those who can’t afford to pay them back, it is not surprising that so many people end up facing debt problems with these organisations. Although it is still very much an issue, it has improved from where it was years ago. Prior to the new regulations being introduced, the loan business was getting to a point out of spiralling out of control, along with the debt issues faced by borrowers. The loan marker reached £2 billion at one point, which was a result of both irresponsible lending and interest rates which were through the roof!
The Financial Conduct Authority ended up imposing fines on some of the biggest lending companies out there. These included Wonga, who ended up being fined £220 million; and other well known lending companies, such as The Money Shop and Quickquid. Some of these companies (included Wonga) ended up being put out of business due to the fines.
As well as the fines, customers also received refunds in some cases, if they have been given a loan based on “limited criteria.” This worked though, and following the new regulations, there has been a dramatic reduction in the number of loans being issued, from 10 million to 1.8 million. The number of lenders has also dropped from 240 to 60.
Are you due a refund? Read through the next section in which we look at these new rules in some detail. If Blue Letter Loans UK is in breach YOU MAY BE DUE A REFUND EVEN IF YOU HAVE PAID OFF THE LOAN.
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.
If Blue Letter Loans UK is in breach of these regulations and is attempting to charge you more than they should, your credit agreement with them is unenforceable and they will not be able to make you repay the loan.
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Is all this information starting to feel overwhelming? Don’t panic! I’ve put together a 4 question debt calculator so you can quickly and easily find the best solution for you. If you’re eligible for the new government scheme, you could write off up to 85% of your debt! Answer the four questions now.
You may not realise this, but there are many so-called loan companies who are operating without permission to do so. Only businesses which are authorised are legally permitted to make certain credit agreements. If the lending company is not authorised, they do not have the right to enforce repayments. This means that you can just stop paying them and they won’t be able to persist with trying to enforce the debt payments.
If you wish to check whether Blue Letter Loans UK is authorised to enforce payment, you can simply enter their name on this Interim Permission Consumer Credit Register search page. You also have the option to check the financial services register here. If there is no valid up to date entry on either of these registers, you have the right to just stop making payments. They will not be able to enforce the payments.
There are other signs that Blue Letter Loans UK are not operating legally, including a lack of information on the company website, out of date information on the website or different information detailed on each of the directories. Another sign is that there is no APR detailed on the website.
How to make a complaint about Blue Letter Loans UK
If you feel that Blue Letter Loans UK have failed to adhere to the regulations, and they are failing to treat you in a fair and respectful manner, you may be able to make a formal complaint. If the dispute is not resolved or the company do not deal with your query within eight weeks, you will be able to escalate your complaint to the Financial Ombudsman.
In order to make the complaint, you should get as much evidence together as you can to support, including phone calls, emails or letters, depending on the nature of your complaint. You can write to Blue Letter Loans UK, with the word ‘Complaint’ as the header. Your complaint is more likely to be successful if you have a lot of evidence to support it. You should also inform Blue Letter Loans UK on how you wish the complaint to be dealt with.
If Blue Letter Loans UK do not provide you with a satisfactory conclusion, you may wish to take your complaint a step further. In this case, you can report them to the Financial Ombudsman. The Financial Ombudsman are available to speak to by phone on 0800 023 4567 or 0300 123 9123.
If Blue Letter Loans UK fail to treat you fairly, you may be able to get to a refund even if the loan has been completely paid off within the last six years. In this case, you may be entitled to receive a refunds, as well as all the interest you have paid on the loan, and additional charges. You may also be entitled to receive 8% interest on these payments.
If your loan is found to have been unaffordable at the time you received it, you can get it removed from your credit record and the outstanding balance may be able to be cancelled.
You should write to your lender explaining your case, including a request for compensation.
If there is no satisfactory response within 8 weeks, you can escalate your complaint to the Financial Ombudsman by phone on 0800 023 4567 or 0300 123 9123.
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 debt. As good practice and to ensure you don’t end up facing further difficulties, the lender should let you know when they plan to do this. However, they often fail to inform borrowers, incase they move it into another account, or withdrawal the contents of their bank account.
If you are already unable to cover your important payments such as your rent, mortgage or utility bill, and Blue Letter Loans UK suddenly take money ahead of these bills, you may end up facing serious issues, which could, in the worst case scenario, even put your house at risk.
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.
If you find that they have attempted two requests or they have taken a partial payment without your explicit permission, they will be in breach of the regulations. You have the right to make a complaint about them to the financial ombudsman, which you can do by calling them on 0800 023 4567 or 0300 123 9123.
Are you unable to pay back the loan?
If Blue Letter Loans UK has operated in the right way but you are unable to repay the loan, you can take some steps to deal with the situation.
If you have a payment plan set up, such as a CPA, standing order or direct debit, you have the right to contact your bank and cancel these. This means that Blue Letter Loans UK will not be able to collect payments automatically, which means you will get control of your bank account. Most banks will advise that you inform Blue Letter Loans UK prior to doing this or after you have cancelled the payment, but you can do this out of respect, rather than a legal obligation. They will have no right to collect any money from you unless you have given them permission to do so.
Cancelling the payment is just one part of it though. Even if you cancel it, you will still be responsible to pay it back. It is a good idea to speak to Blue Letter Loans UK and discuss your finances with them. If you are unable to pay the full amount, they should allow you to set up a repayment plan. Blue Letter Loans UK must always treat you fairly and should be willing to set up arrangements with you to pay it back.
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.
Never roll the loan over
Blue Letter Loans UK may advise that it would be a good idea to roll over the loan, but this is definitely not a good idea. If you do this, you will end up being charged even more interest and additional charges, which will plunge you in even deeper debt. If you do decide to roll the loan over, you should be aware that you can do this no more than twice.
Are you looking for free debt advice?
These are some of the organisations that can offer you free independent advice on debt:
Loan companies and bad press
There is no doubt that loan companies get a bad press. It could be argued that they also offer a valuable service by providing a credit line to those who would may not be able to obtain credit from the usual financial institutions, including banks or credit cards. Sometimes these companies put profits before everything else and they exploit those who are in a vulnerable situation. Of course, some sharks remain, but the new regulations have definitely improved the situation. Debt problems are still very much a problem though.
If Blue Letter Loans UK are failing to follow the required guidelines for lenders, then you may not be required to pay them as the debt cannot be forced.. If you are not able to pay the debt, you should contact one of the organisations above, as they will be able to offer you free help and guidance, when you need it most.
If you can’t pay back your loan do check out my other article here.