On one side is a borrower who takes out a payday loan of pounds 100, makes no attempt to repay it and does not answer the lender's calls. On the other is the lender who not only nearly trebles the debt by adding pounds 175 in default charges but also makes 128 unsuccessful attempts to collect the money directly from the borrower's bank account, charging a fee every time. Within five months the amount owed has ballooned to pounds 900.
Who is being fair and reasonable here? - the lender, the borrower, or neither of the above?
Such questions are now being handled by a team launched within the offices of the financial ombudsman eight weeks ago to deal with the rising tide of problems involving payday loans - and, crucially, settle them before they get out of hand.
Consumers unhappy with the way they have been treated by a financial firm are usually expected to exhaust the company's complaints procedure before they can bring a formal case with the ombudsman, the arbiter of last resort. But the essence of payday lending is speed, and that means charges can rack up fast too.
The usual procedure of then giving the company eight weeks to respond means it can be three or four months before a case is settled. "It can take 15 minutes to get a payday loan, and then the current rules give lenders eight weeks to resolve the case. I think that looks pretty outdated," said the chief ombudsman,
It can also be problematic for borrowers who are having their bank accounts plundered while they await a result, particularly by unscrupulous credit brokers.
The ombudsman's dedicated payday loan team of five responds to calls, emails and, as of two weeks ago, live web inquiries about short-term, high-cost loans, and takes complaints to lenders straight away in an effort to get an early resolution.
In the case of the pounds 100 loan, where the borrower admits he "buried his head in the sand" for two years, the case has now been settled with the ombudsman's help and with the borrower and lender both happy with a final repayment of just under pounds 300. But that is still in excess of the charge cap of 100% of the original loan that has been proposed by the industry's regulator, and a vital part of the team's work is to look again at such cases to see whether the outcome was fair and reasonable and apply those lessons to future problems.
Last year, the ombudsman received 794 complaints about payday loans, a 46% increase on the previous year. But it believes this is just the tip of the iceberg and many consumers are suffering in silence, unaware of their rights or the fact that they could get help. "There are millions of people with payday loans, and we are getting hundreds rather than thousands of complaints," said Wayman.
In cases like those discussed at the team's weekly meetings, the ombudsman will attempt to negotiate a solution that both parties are happy with, without opening a formal case. Often, as soon as contact has been made with the lender or credit broker concerned, money that should not have been taken is refunded, or charges are reduced.
Sometimes it takes more effort: caseworkers trawl through terms and conditions and pages detailing customer's accounts and argue against anything that is unfair or excessive.
The target time for settling problems is 14 days, and in the main the team has stuck to the deadline. In the first seven weeks it had dealt with 250 complaints, and Wayman said the feedback from consumers had been positive.
Listening in to a call from a consumer concerned that he might not get compensation due from Wonga because he has recently moved, it is obvious how expert members of the team are at extracting information from callers and reassuring them that their problems will be addressed.
Colin, who answers the call, used to work at the debt charity StepChange, and he responds kindly as the caller spills out the whole story unprompted, seemingly embarrassed to have taken on the loan in the first place. This is not uncommon, it seems, and is one of the reasons the ombudsman believes that it does not get many calls - that, and some lenders' failure to tell people of their rights. "These businesses had obligations when they were lending money - the fact that you don't have the paperwork doesn't mean you don't have a leg to stand on, it just means it may take longer to piece together," Wayman said.
Wayman is unsure how long the team will continue to operate as it does, saying it will be reviewed in the coming weeks but also that lessons learned will be spread across the service.
Other borrowers who have seen their debts snowball will surely be hoping that there continues to be someone there to help.
Figures from the ombudsman for the first half of the year show that it took on 191,129 new cases across all types of financial services. Although complaints about payment protection insurance (PPI) fell, driving down the headline figure, they still accounted for 70% of the total.
In two-thirds of Lloyds cases, the ombudsman found in favour of consumers, compared with 93% against MBNA, 78% against
Separate figures from StepChange showed it dealt with 43,716 clients with payday loan debts between January and June, compared with 30,762 a year previously. The average debt remained little changed, at pounds 1,652 per client.
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