Monday, 22 January 2007

PayDay Lenders Turn to Ombudsman for Debt Recovery

The Financial Ombudsman may seem to be an unlikely source of assistance for rip-off payday lenders trying to force banks to honour cheques that their customers cannot afford, but the British Cheque Cashers Association (BCCA) - which acts as an industry body for a number of payday lenders - includes details in its Autummn 2006 Newsletter of a payday lender continually re-presenting cheques from its customer to the NatWest (and racking up charges of £60 for the customer in the process) and then complaining to the Financial Services Ombudsman in order to force payment despite this being outside of the Ombudsman's jurisdiction:

"On 12th June we wrote to the Financial Ombudsman Service (FOS) and on 24th June we received a complaint form which we completed and returned on 4th July. On 8th August the FOS asked us to fax a copy of the cheque in question to them. The FOS said that strictly speaking they couldn’t act for us because we were not a customer of NatWest. However, they were willing to give it a try, but if the Bank refused to pay us there was nothing more the FOS could do.

The next day the FOS telephoned to say that NatWest has agreed to pay our claim in full (£160). The caller confirmed that the NatWest would be charged a case fee by the FOS. Two days later we received an “acceptance form” from the FOS which we signed and returned. On 16th August we received a letter from the FOS saying that we will receive settlement direct from NatWest."

Debt on our Doorstep has today reported this matter to the Ombudsman service and asked for their comments.

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