Home credit (which is sometimes also called home-collected credit or “doorstep lending”) is a type of unsecured cash loan arranged at the borrower’s home.
The loans are usually small (a few hundred pounds) and typically last for a few months. But, in some instances, the loans can be for much more and can last for periods up to two years.
The loan repayments are usually made weekly and an agent from the lender usually goes to the borrower’s home to collect payment.
Types of complaint we see
We sometimes hear from people who think they shouldn’t have been given the loan because they couldn’t afford it, or complain that they can’t make their payments and the business is not doing enough to help them.
Consumers may complain that:
- I shouldn’t have been given a loan, or loans, because I couldn’t afford it and the lender should have known this at the time
- My financial circumstances have changed and I can no longer afford to make the repayments to my loan but the lender isn’t treating me fairly
- The amount the lender says I owe is wrong (this could be about the total owed, interest being excessive or dishonest practices by the collecting agent)
- I didn’t apply for the loan or other liability disputes.
- I’m being chased for a debt by a debt collector
- The agent didn’t turn up so I couldn’t make payment
- The agent was rude or intimidating
- The agent discussed my circumstances with someone else
Handling a complaint like this
When you receive a complaint involving home credit, you should reply to your customer within eight weeks.
If you don’t reply within the time limits, or the customer disagrees with your response, they can bring their complaint to us. We’ll check it’s something we can deal with, and if it is, we’ll investigate.
We’ll expect you to be able to show us that you’ve investigated the complaint thoroughly and that you have reflected carefully on the circumstances.
Find out how to resolve a complaint.
What we look at
In the same way as for other types of complaint, when a borrower complains to us about home credit lending we’ll ask:
- Did the business do everything it was required to do?
- And if they didn’t, has their customer lost out as a result?
As with every case, our answer to a complaint will reflect what’s fair and reasonable in the circumstances. And in considering what’s fair and reasonable, we’ll consider relevant law and regulation, regulators’ rules, guidance and standards, codes of practice, and what we consider to be good industry practice at the time.
If there are disagreements about the facts, we’ll make our decision about what probably happened using evidence provided by you, your customer and relevant third parties.
Irresponsible or unaffordable lending
When a borrower complains about credit having been provided irresponsibly we’ll ask questions such as:
- Did the lender complete reasonable and proportionate checks to satisfy itself that the borrower would be able to repay each loan in a sustainable way?
- If reasonable and proportionate checks were completed, was a fair lending decision made?
- If reasonable and proportionate checks weren’t carried out, what would reasonable and proportionate checks more likely than not have shown?
- Bearing in mind the circumstances, at the time of each application, was there a point where the lender ought reasonably to have realised it was increasing the borrower’s indebtedness in a way that was unsustainable or otherwise harmful and so shouldn’t have provided further loans?
- Did the lender act unfairly or unreasonably in some other way?
Find out more about how we handle complaints about unaffordable lending.
Complaints about repayment or disputed transactions and fraud
Where we’re presented with a dispute about the amount the borrower owes. We’ll ask questions such as:
- What’s recorded in the payment book?
- How plausible is each version of events?
- Does what has been said match up with the conduct of the parties?
- Have there been similar complaints about the same agent previously?
Putting things right
If we decide you’ve treated the customer unfairly, or have made a mistake, we’ll ask you to put things right. Our general approach is that the customer should be put back in the position they would have been in if the problem hadn’t happened. We may also ask you to compensate them for any distress or inconvenience they’ve experienced as a result of the problem.
The exact details of how we’ll ask you to put things right will depend on the nature of the complaint, and how the customer lost out. The following information gives an idea of our approach.
If we think something went wrong and the borrower lost out as a result – we typically say the lender should refund the interest and charges their customer paid, adding 8% simple interest.
Our starting point is that the borrower has had the benefit of the money they 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. And we’ll usually say that it isn’t unfair for the lender to ask for this amount to be repaid. 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.
We’re also likely to tell a lender to make sure their customer’s credit file doesn’t have any adverse information recorded about the loans where we’ve identified proportionate checks would have shown that the borrower couldn’t sustainably repay the loan. If we decide that there came 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.
If we think a lender did something wrong, we may say they should put things right by one, some or all of the following:
- waiving interest for a short period of time (or refunding interest if it was applied at the start);
- allowing extra time for missed payments to be made;
- restructuring a loan or loans;
- paying compensation for any distress or inconvenience caused.
A borrower complains about a number of unaffordable home credit loans
A borrower complains that an agent kept part of her payment
Business Support Hub
If you want to talk informally about a complaint you've received, you can speak to our Business Support Hub. They can give general information on how the Financial Ombudsman might look at a particular complaint. We also offer guidance on our rules and how we work.
Find out how to contact the Business Support Hub.