Saturday 23 March 2019

100,000 borrowers in line for loan write-offs after illegal loan case

Most of the people using moneylending services are low-income consumers and regarded as financially vulnerable. (Main image posed by models)
Most of the people using moneylending services are low-income consumers and regarded as financially vulnerable. (Main image posed by models)
Sinn Fein’s Pearse Doherty helped whistleblowers bring illegal loans to the attention of the Central Bank
Charlie Weston

Charlie Weston

Thousands of people with loans from moneylenders could be in line to have their borrowings wiped out and get compensation.

It follows a case won by a Donegal couple who took on the State's largest moneylender through the financial services ombudsman.

They had loans from Provident Personal Credit, but were illegally offered new loans before they paid off the old ones.

The couple complained to the ombudsman, won their case, and got compensation.

They had £4,370 (€6,780) in loans written off, and were awarded £450 (€698) each in compensation. The ombudsman's written finding, which has been seen by the Irish Independent, lists the monetary amounts in sterling.

Now experts say that up to 100,000 people who are estimated to have had their moneylender loans illegally rolled over into new loans could be in line to have them written off and receive compensation.

In 2013 the Central Bank found that a quarter of the more than 360,000 customers of moneylenders were offered new loans before they had cleared their existing one.

It is thought that even more people are now borrowing from moneylenders.

Provident was fined €105,000 by the Central Bank last December after the illegal refinancing of existing loans was brought to its attention by whistleblowers who worked for the company through Sinn Féin Finance spokesman Pearse Doherty.

Mr Doherty said the finding by the ombudsman meant anyone with a moneylender loan that had been refinanced could now seek to have it written off, and be compensated.

He claimed Provident was quietly doing this for anyone who requested it.

"The ombudsman's findings could be seen as a test case and could see Provident and other moneylenders being taught a very costly lesson. I would appeal to anyone with a rolled-over loan to come forward and make a claim to their moneylender."

Mr Doherty criticised the Central Bank for failing to do more to ensure affected customers were compensated for having loans illegally refinanced.

Financial expert Karl Deeter said the ombudsman's finding had set a precedent.

"Everyone who borrowed from a moneylender should make sure it did not happen to them, and if it did this case sets a precedent for compensation."

He called on the Central Bank to conduct a full audit of loans issued by all moneylenders to see exactly how many people have been issued with new loans before existing ones were paid off. There could be potentially thousands of people who have been mis-sold loans."

A spokesperson for the Society of St Vincent de Paul said it has been campaigning for a long time about the refinancing of loans by moneylenders.

Provident did not deny it was cancelling loans and compensating customers.

Asked if it was settling with anyone who had a loan refinanced who complains, a Provident spokesman said it would look at all cases brought to its attention.

"Anyone who makes a complaint of any type will have their complaint fully investigated and if we find in favour of the customer, we will act accordingly.

"Any customer who is not satisfied with the result of our investigation would be free to take their complaint to the financial services ombudsman," Provident said.

The Central Bank said it would take action if it finds cases of refinanced loans.

Irish Independent

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