High-cost UK lenders have had to compensate millions to customers and continue to do so. Customers of Lending Stream may be able to get millions in refunds. Lending Stream is a high-cost UK lender that offers payday loans. If you are a past customer of Lending Stream, it is well worth finding out if you are eligible for a Lending Stream refund.
High-Cost Loans
Many high-cost lenders have struggled with customers claiming refunds in the last few years. The most prominent of these have been Wonga and Amigo Loans. Wonga went bankrupt as a result in 2018. Amigo is currently insolvent and may experience the same fate if they can’t get a scheme approved for repayment. The reason for these refunds is that, in most cases, the loan was unaffordable to the borrower. In these cases, the borrower can get a refund for the interest on their loan.
Borrowers who resort to using high-cost loans do so because they have been rejected by lower-cost lenders. In many cases, the reason for this is that they can’t actually afford the loan. When the borrower states their expenses and income, lenders are expected to find ways of validating claims. Customers should be able to pay interest on the loan and still afford basic living costs. This means lenders can still be guilty of irresponsible lending, even if the borrower lied on their application.
Irresponsible Lending
Irresponsible lending is when a lender offers loans that are unaffordable for the borrower. The Financial Ombudsman (FOS) states regarding affordability:
“The relevant rules, regulations and guidance all refer to a borrower being able to sustainably repay any credit provided. And being able to sustainably repay credit is described as doing so without undue difficulty while being able to meet other commitments and without having to borrow further.”
As such borrowers should be able to afford repayments, as well as basic living costs, bills and past debts. Even if the borrower always made payments on time, the loan could still have been unaffordable. This is especially the case if the borrower had several loans at the same time or often had to refinance or top-up a loan.
High-interest loans are meant to be a short-term solution to cash flow issues. So if an individual keeps rolling over a loan, or repaying one then getting another loan soon after, the lender should have stopped lending to them. However, many lenders have been ignoring even obvious signs of problems such as loans increasing in size or consecutive loans.
Lending Stream
As one of the largest UK payday loans providers, Lending Stream provides small, short-term loans of up to £1,500 with an APR of up to 1,333%. They are a private company owned by Gain Credit LLC.
Lending Streams revenue has previously reached around £100m in 2018 but has dropped to just over half that more recently. With a maximum loan size of £1,500, this implies they have handed out hundreds of thousands of loans over the years.
Lending Stream Claims
There have been some high-profile cases of lenders having to give millions of pounds of redress to customers to the point they become insolvent. However, there are still many lenders that are still lending that may follow. One such lender is Lending Stream. In recent figures from the Financial Ombudsman, 70% of complaints were upheld against Lending Stream. If this is reflective of the number of past customers that can claim refunds, Lending Stream could end up paying millions more back to customers. In their latest accounts (2020), Lending Stream had an accrued liability of £17m, mostly associated with their reserve for complaints and redress. However, with annual revenue over £50-£100m for the last few years, the eventual level of redress to customers could end up being a lot higher if some of their peers are anything to go by.
Claims can be made directly to Lending Stream for free, or through a professional Claims Company, who will help make a claim for a fee. Claims Companies (or CMCs) normally work on a no win no fee basis. CMCs can make the process of getting a Lending Stream refund simpler and help avoid mistakes that make reduce the likelihood of receiving compensation.
Making A Claim
One of the key indicators for the strength of a claim is the number and size of loans. The more loans that the borrower has taken out, the more likely the loan was unaffordable. Taking out new loans or refinancing existing loans indicates the borrower was dependent on the loans. If a borrower took out multiple loans, sometimes they get the last few loans refunded, but not necessarily the first few. However, plenty of cases, where the individual has taken out just one loan have been won. Further examples of who may be eligible for a refund can be found at The Claims Guide.
When a borrower receives compensation, they get their interest and other charges refunded, or get the balanced reduced if they still owe money to the lender. As well as the refund, the borrower also receives 8% interest per year on interest payments from the date they were paid to the date of settlement. However, the borrower still has to pay back the initial loan if they haven’t already done so.
The FOS makes the final decision when the lender and borrower can’t come to an agreement. They try to come to a decision within a few months, but it can take longer. This doesn’t cost anything to the individual making the claim.
Conclusion
Payday loans are a quick and easy option for those who are unable to get a loan elsewhere. However, there seems to be an inherent contradiction in the business models. If a borrower has been rejected by the low-cost lenders, then they likely have the characteristics which would classify them as unaffordable according to the regulator. As such, giving these individuals loans would be classed as irresponsible. As a result, many of these borrowers would be able to claim compensation if they complain.
This may explain why many high-cost lenders have become insolvent, as many past customers win compensation from their former lenders. Lending Stream has a maximum APR of over 1000% and hundreds of millions of pounds previously lent out. It seems likely they could well be one of the next lenders to experience problems.
