You might not have to pay Provident Loans and you may be due a refund!
If you have a loan with Provident Loans, then you will find my short guide extremely helpful. Times are hard these days so we need to find a way to save a few quid. If you’re finding repayments unaffordable then you might be able to cancel your loan and even claim a full 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 Provident Loans?
Provident Loans was founded in 1880 and is one of the leading credit companies in the UK. They offer short-term loans from £100 to £1000 farmer with a total repayment period of 52 weeks. Provident Loans is a division of Provident Personal Credit Ltd.
New laws for Provident Loans
It’s not surprising that so many people are in debt these days. Before the new laws came into force, the lending industry was worth over £2 billion, which was fueled by irresponsible lending and stupidly high interest rates.
Unfair practices have been identified by the Financial Conduct Authority which have resulted in these companies getting huge fines. Wonga for example was fined £220 million, which ultimately put them out of business! Other companies such as and others like Quickquid have been fined £18 million.
Customers that were not properly assessed during their loan application received a refund. This new law worked and over the 3 years following the laws the number of loans issued fell from 10 million to 1.8 million and the number of lenders fell from 240 to 60.
If Provident Loans did not follow any of the laws below, then you could claim for a refund!
Law #1: the loan must be affordability
Of all the new laws, this one has had the most reader success stories for getting a refund. The Financial conduct Authority is the regulator for lenders in the UK and they have explicitly said that a lender must not allow the you to sign an agreement unless they have carried out a creditworthiness assessment and have given a proper regard to their affordability.
The law also says that the repayments must be “sustainable”. This means that you must be able to make repayments on time while meeting other reasonable commitments (eg. Rent, bills, food, car) and without having to borrow more money to make the repayments.
Basically the repayments of the loan should be affordable when you take into account all of your other expenses such as rent, bills, food, car. If you couldn’t afford repayments of your loan, or you found yourself taking out another loan to cover the repayments then you could claim for a refund! See my simple guide for doing so here.
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 #2: limits on interest and charges
This law tends to act as a bonus when claiming under law #1, although technically you could claim for this independently of law #1. The Financial Conduct Authority has introduced a price cap to protect borrowers from excessive charges. These include:
- A cost cap of 0.8% per day on the amount borrowed – this includes both interest and all fees charged.
- A cap on default fees of £15 – after a default interest can still be charged, but it mustn’t exceed the original rate of 0.8% per day.
- A complete cost cap of 100% – you should never be asked to repay more than 100% of the money borrowed.
These limits apply to all credit agreements that have an interest rate of 100% or more and that are due to be fully or substantially repaid within a year.
Additional laws 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 Provident Loans UK has breached any of these laws and has attempted to charge you more than they should,then your credit agreement with them is unenforceable and they will not be able to make you repay the loan! You would have a strong case to claim money back.
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 Provident Loans UK ahead of these bills, you could end up in serious trouble.
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 and you should complain and put in a claim.
The below case study is one of hudreds that exist online.
Can’t afford your next repayment?
If Provident 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. Provident 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 Provident 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 Provident 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.
How to write off your debt
It is possible to write off your debt entirely through an Individual Voluntary Arrangement (IVA). This is a formal agreement to pay the debt collectors an amount you can afford as a one-off sum or as monthly payment.
You only qualify for the government IVA scheme if your debts are over £1,700 and you have more than one debt. Fill out a 30 second form to see if you qualify with my 4 question debt write off calculator.
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 Provident 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.
Find out more about getting a refund on your loan with my loan refund guide with letter templates.