Reply to: Wonga no longer

[LondonManc]

The term you’re looking for is ‘short term high cost credit’ which also covers product terms between 30 and 365 days, so not just payday.

HCSTC to be pedantic

[barrydidit]

The term you’re looking for is ‘short term high cost credit’ which also covers product terms between 30 and 365 days, so not just payday.

[LondonManc]

Does that apply to all consumer loans or only specific short term ones?

i.e. Mortgage rates wouldn't be allowed above 6.5% over a typical 25 year term if same rule applied, so an inadvertent hard cap on interest rates. Though if interest rates rose to anywhere near that percentage many indebted folk would be smoke long before then.

Short term only based on this:
https://www.fca.org.uk/news/press-re...payday-lenders

[Hobosapien]

The best news in this respect was the 2015 legislation preventing the "infinite interest" scenario, where the lenders can "only" receive double the capital originally lent as total repayment.

Does that apply to all consumer loans or only specific short term ones?

i.e. Mortgage rates wouldn't be allowed above 6.5% over a typical 25 year term if same rule applied, so an inadvertent hard cap on interest rates. Though if interest rates rose to anywhere near that percentage many indebted folk would be smoke long before then.

[northernladuk]

Seems now anyone who took PPI is pretty much guaranteed a payment under the Plevin Ruling.

https://www.moneysavingexpert.com/re...urance/#plevin

It appears so. It was so badly handled it seems a fair assumption they were virtually all miss-sold.

[vetran]

Well that wasn't the case for my other half. Two loans from Black Horse, one with PPI and the other wasn't. Although they had all the facts in the loan documents about her then other halfs part time job and income they sold them PPI when he wasn't even eligible to claim as per the T&C's.

I didn't anything about not taking a loan unless you took their insurance although I can imagine it happened. That's not the root of the miss-selling scandal though. What they sold, optional or not, was not fit for purpose in most cases.

Seems now anyone who took PPI is pretty much guaranteed a payment under the Plevin Ruling.

https://www.moneysavingexpert.com/re...urance/#plevin

[northernladuk]

The basis of the PPI scandal was that they wouldn't loan to you unless you took their insurance. It wasn't optional but they made that very clear verbally. A couple of lenders tried it on with us.

Well that wasn't the case for my other half. Two loans from Black Horse, one with PPI and the other wasn't. Although they had all the facts in the loan documents about her then other halfs part time job and income they sold them PPI when he wasn't even eligible to claim as per the T&C's.

I didn't anything about not taking a loan unless you took their insurance although I can imagine it happened. That's not the root of the miss-selling scandal though. What they sold, optional or not, was not fit for purpose in most cases.

[vetran]

I have to say as horrified as I was with the rates Wonga were offering I don't think this is right either to be fair. I know they took the piss and I'm as glad as anyone to see the back of them for that but the claiming thing just doesn't sit right either.

That said I don't think you can compare it to PPI. That's all about offering an insurance product that wasn't fit for purpose in good percentage of cases. For many it did and it wasn't miss-sold so I don't agree they should (and I believe can't) claim it back either. That's different to the Wonga mess I believe.

The basis of the PPI scandal was that they wouldn't loan to you unless you took their insurance. It wasn't optional but they made that very clear verbally. A couple of lenders tried it on with us.

[LondonManc]

Sub-prime is a rate-for-risk market, with APRs from 39% to over 1000% to reflect a whole host of things included credit score, CCJs, etc. The silly APRs are, as previously stated, clouded by the term of the loan but generally reflect a customer's previous credit behaviour.

The key issue with Wonga wasn't the loans themselves - it was the fees and other exploitative practices. There are other players in the sub-prime market that don't employee these tactics and if they can keep people out of the clutches of loan sharks without exploiting them as Wonga did then long may they continue to provide a service that high street lenders do not want to. The best news in this respect was the 2015 legislation preventing the "infinite interest" scenario, where the lenders can "only" receive double the capital originally lent as total repayment.

As others have said, it should only be the extra fees that they should be compensated for (plus interest), not the original loan.

[original PM]

Although as a business I simple declare myself bankrupt, and then anyone who I owe money to can go whistle.

Even if they are small one man band businesses who rely on the income to feed their families.....

So anyone who Wonga owes money too is not getting anything.

But if you owe Wonga money you have to pay - I think not.

Most of those people will have zero credit rating not paying back those utter ******* at Wonga will not make it any worse.

[northernladuk]

Don't get me wrong - I'm not a banking sympathiser, but I don't think it's right that people can take out loans and then try and claim the money back years later. It's teaching a generation there are no consequence to actions - we can enter financial agreements and if we later decide we don't like the terms, we can run to the FOS and demand our money back.

I have to say as horrified as I was with the rates Wonga were offering I don't think this is right either to be fair. I know they took the piss and I'm as glad as anyone to see the back of them for that but the claiming thing just doesn't sit right either.

That said I don't think you can compare it to PPI. That's all about offering an insurance product that wasn't fit for purpose in good percentage of cases. For many it did and it wasn't miss-sold so I don't agree they should (and I believe can't) claim it back either. That's different to the Wonga mess I believe.

[fiisch]

Because there's literally nothing in between full, unregulated, free for all capitalism and communism? Congrats on your contention for Top Cretin 2018.

The problem with Wonga is that the very audience they were targeting ('Those in need with payday loans to bridge a personal cashflow issue') are the very people who are likely already spiraling the wrong way and the last thing they really need is further expensive debt. There's nothing inherently wrong with credit and bridging loans but charging over £140 for the luxury of borrowing £300 is simple exploitation, as they know full well that those who need to borrow £300 from them can likely ill afford an extra £140, thus tying them into a cycle of further loans.

Of course, you're right, and literally everyone else including the FCA are wrong and that's why things are going so well for Wong....oh.

So marketing to a group of people who you know can't afford your products is wrong? Surely the entire advertising industry needs to take a long hard look at itself? I can see people being a bit uneasy about profiteering off people less well-off, but then where do you stand on Brighthouse?

The FCA are the paragon of wisdom. The Wonga case follows the PPI scandal - you know, the one where people ticked boxes and didn't read the Ts&Cs, then cried foul years later for a bit of "free cash".....?

Don't get me wrong - I'm not a banking sympathiser, but I don't think it's right that people can take out loans and then try and claim the money back years later. It's teaching a generation there are no consequence to actions - we can enter financial agreements and if we later decide we don't like the terms, we can run to the FOS and demand our money back.

[vwdan]

Maybe you're right, maybe we should go full blown communist while we're at it....

Wonga provided those in need with payday loans to bridge a personal cashflow issue. Those who were too stupid to acknowledge the consequences of not paying ended up repaying large amounts. Welcome to capitalism.

Because there's literally nothing in between full, unregulated, free for all capitalism and communism? Congrats on your contention for Top Cretin 2018.

The problem with Wonga is that the very audience they were targeting ('Those in need with payday loans to bridge a personal cashflow issue') are the very people who are likely already spiraling the wrong way and the last thing they really need is further expensive debt. There's nothing inherently wrong with credit and bridging loans but charging over £140 for the luxury of borrowing £300 is simple exploitation, as they know full well that those who need to borrow £300 from them can likely ill afford an extra £140, thus tying them into a cycle of further loans.

Of course, you're right, and literally everyone else including the FCA are wrong and that's why things are going so well for Wong....oh.

[fiisch]

I'm sure there are plenty of morally blind people out there who feel the same way. I'm sure few of them were ever in the situation they felt the need for a pay-day loan though.

Wonga is basically akin to the discworld's "Thieves' Guild" - a legal, licensed loan shark.

Maybe you're right, maybe we should go full blown communist while we're at it....

Wonga provided those in need with payday loans to bridge a personal cashflow issue. Those who were too stupid to acknowledge the consequences of not paying ended up repaying large amounts. Welcome to capitalism.

[d000hg]

Yes, yes unlike you I have been a successful contractor, and hence company director, for most of my career.

However you don't seem to understand English though - I asked you what evidence of wrong-doing (not moral but legal) by directors of Wonga you had to justify your libellous post?

They have to give compensation because they did something wrong. By giving compensation they are then in the clear legally.
If they cannot compensate those who they legally must, and go bust, does this not imply the directors ran the company incompetently however?

Am I the only one that feels slightly sorry for Wonga?

Yes, they made money off the less wealthy, but they didn't force anyone to take up their loans at extortionate APRs.

I'm sure there are plenty of morally blind people out there who feel the same way. I'm sure few of them were ever in the situation they felt the need for a pay-day loan though.

Wonga is basically akin to the discworld's "Thieves' Guild" - a legal, licensed loan shark.