Do you owe money to Ikano Loans? You may not need to pay them, and you may even be due a refund!
Did you take out a previous loan with Ikano Loans? Are the loan payments out of your reach, and unaffordable to you? Are Ikano Loans threatening to take you to court? If you are facing problems with Ikano Loans then this article can help you. You may even be able to cancel your loan and get 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 Ikano Loans?
Ikano Bank offers personal loans of up to £,15,000 with up to five years to pay. The company offers a fast loan process with funds being available the next working day. Ikano was founded in 1994 and is own by the same founders as IKEA.
Read what to do if you can’t pay back your debt.
Case Study: Newlook and Ikano debt
“I opened a New Look store card in 2014 and am now being regularly chased for a ‘debt’ outstanding on it. It started when I couldn’t pay off the balance online as I was blocked from accessing it.
I called and was told the issue would be sorted. However, I waited and didn’t receive any paperwork. I also offered to make a payment over the phone but was told I couldn’t.
Eventually, in March 2015, I received some paperwork. I paid the remaining balance by cheque and requested the account to be closed which it finally did. I destroyed the card.“
Ikano Loans and the law
It is hardly surprising that so many people are in debt these days when you consider how many lenders are involved in irresponsible lending. Prior to the new laws being brought into force, the lending industry was thought to be worth as much as £2 billion, which was a result of irresponsible lending and extremely high interest rates.
Unfair practices were found by the Financial Conduct Authority and the consequences were that many of the most widely recognised lending companies ended up with huge fines. One example was Wonga who were fined £220 million, and this ended up putting them out of business. Other companies such as Quickquid were also fined, and the results were that many lenders could no longer afford to operate.
Customers that were found not to have been assessed correctly during their loan application ended up receiving a refund. Thankfully, the new law worked and following the three years after the law was introduced, the number of loans being issued dropped from 10 million to 1.8 million and the amount of lenders also fell from 240 to 60.
Law #1: the loan must have been found to be affordable
One of the new regulations around lenders and laws is that they must have assessed affordability before approving the loan. This law has been the most successful with debtors getting refunds. According to the Financial Conduct Authority, who are the regulator for lenders in the UK, lenders are not permitted to allow borrowers to sign an agreement, unless they have carried out a proper in-depth assessment of affordability, and have taken proper time to assess affordability.
In addition, the law also states that the repayments should be “sustainable”. This means that borrowers should be in a position to make repayments on time, while also being able to stick to other commitments (including rent or mortgage, food, energy etc), without being in a position were they need to borrow more money to make the repayments.
In short, the repayments of the loan should have been affordable, which taking into account the other expenses you have, including rent, bills, food and your car. If you are unable to afford the repayments of your loan, or you have had to take out another loan to cover the repayments of this loan, then you could claim for a refund! See my simple guide for doing so here.
Law #2: price caps on interest and charges
The law on price caps for interest and charges is a great addition, if you are claiming under law #1. Although, you have the right to claim for this separately to law #1. There was a price cap introduced by The Financial which was designed to try and provide protection to borrowers, so that they didn’t face excessive charges.
These price caps include:
- 0.8% cost cap per day on the amount of loan you have borrowed – this is a combination of both interest and all fees charged.
- Default fees cap of £15 – after a default, the lender may still charge interest but it must not exceed the original rate of 0.8% per day.
- A complete cost cap of 100% – Lenders should not ask borrowers to repay more than 100% of the loan you have borrowed.
The cost cap limits are relevant to all credit agreements with an interest rate of 100% or more and that will be due to be fully or substantially repaid within a year.
There are also other laws which also came into force in May 2017. According to these, lenders must provide details of the products they offer on a price comparison website, which must be authorised by the FCA. Borrowers must also be provided with a summary of the cost of borrowing.
If Ikano Loans UK are found to be in breach of any of these laws and they have attempted to charge you more than they are permitted to, the credit agreement will become unenforceable and they will not be able to make you repay the loan! You would have a strong case to claim money back.
Find your best debt solution (in 1 minute!)
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.
Law #3: Continuous Payment Authority and what you need to know
In most cases, loan companies will try to get you to repay your debt using a Continuous Payment Authority (CPA). With a CPA, the lending company will have permission to debit any sum of money they wish from your bank account, at any time they wish. Although, they should let you know about their plans to debit your account, prior to doing so, many of them don’t bother to take care of this necessary step. The end result is you may not even realise the funds have left your account until you look at your next bank statement.
If you are struggling with important payments including your rent, mortgage or utility bill, and the money is suddenly taken by Ikano Loans UK before these bills come out, you could find yourself in serious trouble.
There are new regulations regarding CPA, which mean that if the CPA debit fails on two occasions, the lending company must make no further requests to take the money from your bank account.
There are also rules relating to the amount of money they are permitted to take using a CPA. They are no longer permitted to take partial payments. If there is not enough money in your account to cover the full amount of they payment, they must not take anything. Only if you agree that they can take a partial payment, they are allowed to do so, but you must give your permission in advance for them to do so.
When they do make more than two requests or they take a partial payment without your explicit permission they are in breach of regulations and you should complain and put in a claim.
Can’t afford your next repayment?
If Ikano Loans UK has operated legitimately but you simply can’t afford to repay the loan, there are some steps you can take to protect yourself.
If you are paying them by standing order or direct debit, you should contact your bank and cancel these. Ikano Loans UK will no longer be able to collect payments automatically and you will retain control of your bank account. Your bank may advise you to inform Ikano Loans UK that you have done this, but you are under no legal obligation to do so; they will be unable to collect any money from you until you give them explicit permission to do so.
Of course, you will still owe them money so you must deal with that directly; while you might be tempted to do so, don’t hide your head in the sand. Your first approach should be to contact Ikano Loans UK and talk to them about your problems. They are obliged to treat you fairly, so you should be able to come to an agreement to reschedule your repayments.
By law, lenders must:
- Indicate where you can obtain free independent debt advice
- Hold off debt recovery for a reasonable period while you develop a repayment plan possibly using a debt advisor
- Giving you reasonable time to repay possibly freezing interest and additional charges.
I’ve written more about what to do if you can’t pay back your loan here.
Want to make a claim?
The Financial Ombudsman Service received 10,529 complaints about these types of loans in 2017 – this is just the tip of the iceberg as many would have been resolved without escalating to the Financial Ombudsman Service. So it’s safe to say that you’re not alone.
If Ikano Loans UK has treated you unfairly, you may be entitled to a refund even if you have paid off the loan within the last six years. You can expect to be refunded all the interest you have paid on the loan along with any additional charges, plus 8% interest on any refunds – this adds up to £1000s for some readers.
I’ve had 100s of success stories from readers who have followed the simple templates in my guide.