Our starting point is that the borrower has had the benefit of the money they why not look here borrowed and it’s fair that they should pay it back. So if a borrower has a complaint upheld and there’s still an outstanding balance on the credit we’ll usually tell the lender to remove all the interest and charges applied from the start – so that a new starting balance consisting of only the amount lent is left – and then deduct any payments already made. If this results in the borrower having paid too much, then any overpayments should be refunded, adding 8% simple interest.
Sometimes there’ll still be an outstanding balance even after all adjustments have been made. But there will be some circumstances when we don’t think this is fair.
One example might be where the lender had enough to know that providing funds to the borrower was so clearly unsustainable, as there was no realistic prospect of them paying back what they were being lent. Another might be where paying back any outstanding amount would cause the borrower financial hardship.
Where the credit has been used directly to fund the cost of a car we would usually instruct the credit provider to take back the car and cancel any further amounts due. We might also tell the credit provider to refund any deposit payment the consumer has made, with interest. If the consumer has used the car we might think it reasonable for the finance company to keep some, or perhaps all, of the monthly payments made to the finance agreement.
If we e a point where the lender should have realised that any further lending was clearly unsustainable, we’re likely to tell the lender to get these removed from their customer’s credit file completely.
We may also award the borrower additional compensation if we think they were caused distress and inconvenience – especially if we find that the lender acted unfairly or unreasonably towards them in some other way.
The OFT also required lenders to complete a “borrower-focussed” assessment of affordability (in addition to a creditworthiness assessments), to see if the prospective borrower could have afforded to repay the lending in a sustainable manner. This is set out in the OFT’s guidance for creditors for irresponsible lending. So a lender needed to consider the impact of any credit payments on the borrower and not just the likelihood of getting their money back.
And in the case of open-ended agreements or running accounts – such as credit cards or catalogue accounts – whether the borrower would have been able to sustainably repay the amount lent within a reasonable period of time. Finally we’ll also think about whether what had happened during the course of the borrower’s history with the lender and/or what the lender had gathered ought to have shown the lender that any further credit was simply unsustainable. For example, because the lender would’ve seen that the borrower was continually taking loans and it was difficult to see any reasonable prospect of them repaying what they already owed let alone any new credit.
If we think the borrower was unfairly provided with credit and they lost out as a result – we typically say the lender should refund the interest and charges their customer has paid, adding 8% simple interest.