Update: In October 2019, Money Shop Loans (a trading name of Instant Cash Loans Limited) went into administration. They are no longer engaging in lending activity, but any outstanding loans will remain subject to FCA regulations.
Information correct as of 20/04/21 (FCA)
Are you considering a loan with Money Shop? Or perhaps you already have one, and you’re looking for further information about the company. Either way, we’ve compiled the most important, in-depth information about Money Shop Loans for you in this loan guide.
Who are Money Shop Loans?
Money Shop offer loans to UK residents. The company originally registered as a credit broker but in 2005 became a direct lender registered in the UK.
Law #1: the loan should have been affordable
The Financial conduct Authority works as a regulator for lenders in the UK and they have explained said that lenders must not permit you to sign an agreement unless there has been an assessment carried out and proper time and effort has been taken to understand their affordability.
According to the law, repayments must also be “sustainable”. This means that repayments would be affordable, and you would still be able to make repayments on time while ensuring you can meet your other commitments, including your rent, mortgage etc, without having to borrow more money to make these payments.
In short, the loan repayments should have been affordable when all other bills and expenses were taken into account.
Law #2: interest and charges – the limits
The Financial Conduct Authority brought a price cap into place in order to protect borrowers from facing excessive charges. These include:
- 0.8% cost cap per day on the value of the loan borrowed – this includes a combination of both interest and fees.
- A default fees cap of £15 – interest can still be charged after a default is issue, but it cannot be more than the original rate of 0.8% per day.
- A complete cost cap of 100% – debt collectors cannot ask you to pay back over 100% of the money borrowed.
These limits are relevant to all credit agreements with an interest rate of 100% or more and that will either be fully or at least substantially repaid within a year.
Other laws were also enforced from May 2017. According to these, lenders must provide details of the products they are offering on a price comparison website, which should be authorised by the FCA. Borrowers should also be given summary of the cost of what they have borrowed.
It is common for loan companies to request that you repay the debt via a Continuous Payment Authority (CPA). With a CPA, the company has the right to debit money from your bank account.
With the new regulations which have been put in place, if the CPA fails on two occasions, the company will not be able to make any further requests to debt the money.
The new rules also cover the amount of money they are permitted to take using a CPA. According to this, they are not allowed to take any partial payments anymore. This means that if you have a lack of funds in your account to cover the full amount of the payment which is due, they are not permitted to take anything at all. The only way around this is if you agree that they can take a partial payment, but otherwise, they must not do this.
Can’t afford your next repayment?
According to the law, lenders should always:
- Offer you information on where you can find free independent debt advice.
- Ensure a reasonable period of time is provided to the debtor while a repayment plan is developed
- Offer a reasonable amount of time to the debtor to pay off the debt, which may include freezing interest and additional charges.
I’ve written more about what to do if you can’t pay back your loan here.