Another day, another payday lender in the press! This week it’s Dollar’s turn to hit the headlines, after a review by the FCA (Financial Conduct Authority) revealed errors made by the payday loans company.
Dollar is the second largest payday lender in the UK, and is the parent company behind The Money Shop. It also trades under the names of Payday UK, Payday Express, and Ladder Loans.
Back in February this year, a review of customer calls showed that Dollar was approving loans for amounts higher than their own lending criteria would normally allow. This practice had been going on for over a year (between January 2013 and April 2014), and was down to a system error.
Is Dollar going to do anything about it?
Dollar’s agreed with the FCA to refund £700,000 of interest and default charges to more than 6,000 customers. The company has also said they’re going to appoint an independent person to review its lending decisions, which will include making sure customers are only lent an amount of money they’ll be able to repay.
Dollar customers: what to do next
If you think you’ve been affected, you don’t need to do anything for now. Dollar will contact all customers affected by the system error immediately. Some customers will receive a cash refund, while the majority will have their outstanding balances reduced.
StepChange Debt Charity clients: how a refund could affect your debt solution
If you’re on a DMP (debt management plan) or TPP (token payment plan)
It’s likely that the refund you’ll get will be quite small, so if you’re a DMP or TPP client you won’t be expected to pay it into your plan. If you’re refunded a larger amount of money, you can get in touch with us for advice on how to use it.
If you’re on a DRO (debt relief order)
If you receive a refund from Dollar and you’re on a DRO, you’ll have to let the Insolvency Service DRO Team know. As long as the amount of money you get is under £700 and accounts for less than 50% of your total debt, your DRO won’t be revoked.
If you’re on an IVA (individual voluntary arrangement) or Trust Deed
If you’re on an IVA and receive a refund from Dollar, you’ll have to let your trustee know. If the refund you get is a small amount of money, you’ll be allowed to keep it. Larger payments (usually over £500) will have to be paid to your trustee to be put into your IVA.
If you’re bankrupt or have gone through sequestration
If you’re bankrupt and get a refund, you have to declare it to your OR (official receiver) or AiB (Accountant in Bankruptcy), and it’s likely you’ll have to pay the money to them.
Payday loans aren’t a solution to debt, and while they might be a short term fix for some, they can make your financial situation worse in the long run.
If you’re thinking about taking out a payday loan, our free guide to payday loans will tell you everything you need to consider before you do.
If you’ve already taken out a payday loan and are struggling to make repayments, you can use our free and anonymous Debt Remedy tool will help you to create a personal action plan to deal with your debts.