Did you know you may not need to pay Money Shop Loans and you could even quality for a refund!
Do you have an outstanding loan with Money Shop Loans? Were you offered a loan which was not affordable for you? Are the loan company on your case about the loan, and want you to start making payments? If you are facing issues with Money Shop Loans, this article is designed to help you. You might 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 Money Shop Loans?
Money Shop is registered in the UK and offer short-term loans of up to £1,000. Customers can enjoy a repayment period of up to 12 months with a possible same-day pay out. The company originally registered as a credit broker but in 2005 became a direct lender registered in the UK.
Money Shop Loans and what the law says
It hardly surprising that there are so many people are in debt these days. Prior to new laws being brought into force, the lending industry was as high as £2 billion, and this was a result of lenders offering loans to the wrong people, and interest rates which were too high.
The Financial Conduct Authority identified bad practices which have caused these companies to be issued fines, and some even went bust as a result. Wonga received a fine of £220 million, and ended up being put of business. The Money Shop and Quickquid also received huge fines.
Where it was found that customers had not been assessed properly, they received a refund. The introduction of this new law made a difference and following the 3 years after the laws were introduced, the amount of loans being issued dropped from 10 million to 1.8 million and the lenders also dropped from 240 to 60.
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If Money Shop Loans did not follow any of the laws below, then you could claim for a refund!
Law #1: the loan should have been affordable
Most success stories have came from this law, where loans should have been affordable to the borrower, before they were issued. 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. If you were unable to afford the repayments of your loan, or you ended up having to take out another loan in order to cover the repayments then you could claim for a refund! See my simple guide for doing so here.
Law #2: interest and charges – the limits
If you are claiming under law #1, this one can be a bit of an extra bonus. It is possible to claim for this independently of law #1. 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.
If Money Shop Loans UK have failed to adhere to these laws and they have tried to charge you more than they are permitted to ,then the credit agreement will have become unenforceable and they will not be able to make you repay the loan! You would have a strong case to claim money back.
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 any amount of money they want from your bank account, whenever they wish. They have a responsibility to to let you know about their plans to do this before they debit your bank account, but there are many who don’t bother to carry out this important step. As a consequence, you are not expecting it, and suddenly the money has gone from your account, without any warning!
If you are already finding it difficult to make important payments including rent, mortgage or utility bill, payments and the money is suddenly taken from your account by Money Shop Loans UK before these bills come out, you could find yourself in a lot of trouble.
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.
If they do make more than two requests or they take a partial payment from your account, and you have not given them explicit permission to do so, they would be breaching the regulations and you will be permitted to make a complaint and put in a claim.
Can’t afford your next repayment?
If Money Shop 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. Money Shop Loans UK will no longer be able to collect payments automatically and you will retain control of your bank account. It is a good idea to speak to Money Shop Loans UK and let them know about your plans to cancel the payment plan, but you don’t need to do this, there is no obligation to do this. They cannot legally continue to take the funds if you have cancelled the payment plan.
Even if you cancel the repayment plan, you still have a responsibility to pay the money back, and you should deal with the company directly to do this. It may be tempting just to hide away from your Discuss your issues with Money Shop Loans UK and let them know how you would like to move forward with paying the debt. They are obliged to treat you fairly, so you should be able to come to an agreement to reschedule your repayments.
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.
How to make a claim?
The Financial Ombudsman Service received a staggering 10,529 complaints regarding loans like this in 2017. This is short of the actual number though, as many would have already been resolved, without escalating it to the Financial Ombudsman.
If Money Shop Loans UK are found to unfairly, you may be able to get a refund, even if the loan has been completely paid off within the last six years. As well as a refund on the interest you paid, you should also expect any additional charges to be refunded, plus 8% interest on any refunds. In some cases, this works out as £1,000’s of pounds!
I’ve had 100s of success stories from readers who have followed the simple templates in my guide.