In early 2019, Tama borrowed $250 from a payday lender. Tama thought that he had made all of his required repayments and attempted to check this on the lender’s online portal. Tama was unable to log in, or to make contact with the lender to verify that the loan had been repaid. Tama had mistakenly not paid the final payment, but because he could not login, he did not know this.
Frustrated by his inability to log in or contact the lender, Tama contacted FSCL for help.
Tama disputed the lender’s right to add default fees for missed payments. Tama argued that he had been trying to log in online and to contact the lender to make the payments for a number of weeks.
The lender argued that it had responded to Tama’s emails and that Tama should have been able to access the portal the whole time. The lender wanted to be paid the full outstanding amount.
While we were reviewing the complaint, Tama received a number of messages from a collection agency who had been sold Tama’s debt. We contacted the lender and explained that under FSCL’s terms of reference, no recovery action can be taken against a complainant while we are investigating a complaint. During the investigation, we also noticed that Tama’s loan was unaffordable for him and the lender had not complied with its responsible lending obligations.
Due to the lender passing on the debt to a collection agency during an investigation and the issues around responsible lending, we suggested to the lender that they accept Tama’s previous payments as full and final settlement of the loan.
The lender agreed to this suggestion and wiped Tama’s final payment, and all the default fees from his account. Tama was very happy with this result.
Insights for the participants
It is important that lenders do a thorough investigation before they lend money to borrowers. The lender must be satisfied that a borrower can repay the loan as well as meet the other necessities in their lives, without substantial hardship.
It is also important that lenders understand that, once a complaint has been raised, they are unable to pursue recovery action against the complainant, unless they first seek permission from our CEO.