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Are Mutual Loans hassling you about an outstanding loan? Are you worried about repaying your loan? Are you being told they may visit your home or even take you to court? Was the loan unaffordable, and should may not have been given to you in the first place? If you are having these issues with Mutual Loans then this article should be able to help you. 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.

Mutual Loans

Who are Mutual Loans?

Mutual Loans is a UK lender that provides short-term loans between £100 and £1,000. Customers can enjoy a repayment term of up to 102 weeks, with an easy online application process. The company was founded in 1898 and now forms part of one of the largest home credit companies in the UK.

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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.

Are loan companies making it too easy to borrow money?

It can sometimes be too easy to borrow money through lenders. There is an abundance of companies who would be more than happy to offer you a cash advance within a few minutes, or to give you a loan of as much as £1,500 in just a few second. They may make promises to give you a cash advance instantly without undertaking any credit checks. Some lenders even offer loans to people who they know have a “Very Bad Credit” history or who are struggling with other payments.

Write off up to 85% of your debts

This 4 question debt calculator will tell you if you’re eligible.

What is the total amount of your debt?

What causes debt problems and is the government doing anything to improve the situation?

It it wouldn’t surprise anyone that debt problems are common with these organisations. The situation has improved greatly over the years, but there is still an issue. Prior to the new regulations being brough into force, the loan business was getting out of control, and debt issues were becoming increasingly problematic. The loan market was worth over £2 billion at one point, and this was a result of a combination of irresponsible lending and exceptionally high interest rates.

Unfair practices were identified by the Financial Conduct Authority, and these resulted in some huge fines being issued to many of the top players in the lending industry. These included Wonga, who were fined an astronomical £220 million; and others included The Money Shop and Quickquid. Some of these companies received fines which were so high, they were put out of business. If the FCA found that money had been given to people who could not afford to pay it back due to a lack of affordability checks, the customers ended up receiving a refund. The harsh but fair medicine did the job, as over the three years after the regulations were put into place, the number of loans issued dropped from 10 million to 1.8 million and lenders also fell 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 Mutual Loans is in breach YOU MAY BE DUE A REFUND EVEN IF YOU HAVE PAID OFF THE LOAN.

Loan interest and other charges – the government cap

The Financial Conduct Authority has put some price caps into place to try and protect borrowers from facing excessive charges. These price caps include:

  • A cost cap of 0.8% per day on the value of what you have borrowed – this is a combination of both interest and all fees charged.
  • A cap on default fees of £15 – interest can still be charged after a default, but it cannot be more than the original rate of 0.8% per day.
  • A complete cost cap of 100% – you should not be required to pay over 100% of the money borrowed.

These limits are relevant to credit agreements which have an interest rate of 100% or more a year and that will be due to be fully or substantially repaid within a year.

Other regulations were brought into place in May 2017. Lenders have a responsibility to provide details of the products they have on a price comparison website, which must be authorised by the FCA. Borrowers must also be offered a summary of the cost of borrowing.

If Mutual Loans have breached these regulations and they are trying to charge you more than they are permitted to, your credit agreement would be unenforceable and as a result, they would not be able to force you to repay the loan.

Is Mutual Loans authorised to chase payments?

It is no surprise that there are many companies who refer to themselves as ‘loan companies’, but they are doing business when they do not have the right to do so. The law states that only authorised businesses are allowed to make certain credit agreements. If they do not have authorisation, then they will not be able to enforce repayments. This means that you can stop paying them and they won’t be able to do anything about it.

If you want to check whether Mutual Loans is authorised, you can simply enter the company name on this Interim Permission Consumer Credit Register search page. Another option is to check out the financial services register here. If there is no valid up to date entry on either of these registers,you can just stop paying them. This means they will not have the power to enforce the debt.

Other indicators that Mutual Loans may not be operating legally include a lack of information available on the company website, information which is out of date or different from tthat which appears on the two directories, and a lack of information on the APR is another sign.

How to complain about Mutual Loans

If you believe that Mutual Loans is in breach of the regulations and is treating you in any way unfairly, you have the right to complain formally, and if your dispute remains unresolved or is not dealt with within eight weeks, you can to escalate your complaint to the Financial Ombudsman.

You should collect together all the evidence you have including details of any phone calls. Write to Mutual Loans heading your letter with the word Complaint. The more detail you can provide, the better. You should also say how you would like the matter to be resolved.

If Mutual Loans fails to provide you with a satisfactory conclusion, you can take your complaint to the financial ombudsman. The best way of doing to is to contact them by phone on 0800 023 4567 or 0300 123 9123

If Mutual Loans has treated you unfairly, you may be entitled to a refund even if you have paid off the loan within the last six years. If so, you can expect to be refunded all the interest you have paid on the loan along with any additional charges. You should also receive 8% interest on these payments.

If your loan is considered to have been unaffordable you can insist that it is removed from your credit record and that the outstanding balance is cancelled.

The first step is to write to your lender stating your case and asking for compensation.

If you do not receive satisfaction within 8 weeks you can follow it up through the Financial Ombudsman by phone on 0800 023 4567 or 0300 123 9123.

New rules regarding Continuous Payment Authority

Most loan companies will want you to repay the debt using a Continuous Payment Authority (CPA). This provides the company with permission to take any sum they wish from your bank at any time they want. They are supposed to inform you prior to debiting your bank account, but many of them fail to carry out this crucial step. The result is you don’t know the money has left your account until you see your next bank statement.

If you are struggling with important payments such as your rent, mortgage or utility bill, and the money is taken by Mutual Loans ahead of these bills, you could end up in serious trouble even putting your house at risk.

New regulations mean that if the CPA fails to be paid on two occasions, no further requests to your bank account are allowed.

There are also rules governing the amount of money they can take using a CPA. No longer are they allowed to take partial payments. If you don’t have enough money in your account to cover the full amount of the payment due, they can’t 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. You can report them to the financial ombudsman on 0800 023 4567 or 0300 123 9123.

What to do if you simply can’t afford to repay the loan?

If Mutual Loans 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 CPA, standing order or direct debit, you should contact your bank and cancel these. Mutual Loans 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 Mutual Loans 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 Mutual Loans 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.

Read what to do if you can’t pay back your debt.

Don’t roll over your loan

Mutual Loans might suggest that you roll over the loan, but doing so is almost certainly a bad idea. You will be charged even more interest and additional charges leaving you in even deeper debt. By law loans can be rolled over no more than twice.

Getting debt help

There are several organisations that provide free independent advice on debt:

Are loan companies all sharks?

There is little doubt that loan companies receive a bad press. It can be argued that they also provide a valuable service by offering a credit line to people who would be unable to obtain credit from a bank or credit card. It is only when these companies place profits ahead of everything else and exploit their customers that they do real harm. While some sharks remain, the new regulations have made it much safer to use these companies. However, many people still get into debt problems.

If Mutual Loans are in breach of the regulations, then you are entitled not to pay them as the debt is unenforceable. If you simply can’t afford to pay, then contact one of the organisations we have listed above, they will provide the help and guidance you require.

References

CONC 2.1 Application

CONC 5.2A Creditworthiness assessment

CONC 13.1 Application

Read More…

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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