Are Payday Loans the New PPI?
Payday loan claims are increasing. Will PPI claim companies turn to this market after the deadline?
News of the PPI deadline has now swept across our screens for over a year. Arnold Schwarzenegger has fronted the campaign and urged customers to “do it now” and make a claim.
The claims management market has existed for a long time, with companies handling personal injury and mis-sold mortgage endowment claims for a number of years before PPI. Claim software enabled these companies to handle multiple claims at once and streamline the claims process. But the huge mis-selling of PPI sparked the emergence of even more claim companies, many focusing solely on PPI claims.
The PPI deadline is set for 29th August 2019 and, with less than a year until the deadline, those claims companies handling PPI cases will need to decide what to do afterwards.
As these companies are forced to make this decision, their attention may be turning to payday loan claims. In 2017 and 2018, the Financial Ombudsman Service saw payday loan complaints rise by 60%. Cases against payday loan companies have increased dramatically in recent years and this could be the new market that these companies switch to.
Payday loan company Wonga has recently gone into administration. It stated that the rise of claims is one of the reasons for its significant losses. More people are making claims, forcing Wonga and other payday loan companies to refund customers.
Despite the collapse of Wonga, many households will continue to use payday loan companies to get quick cash. But it’s crucial that people agreeing to these loans have all of the information about how much and when they will need to repay. Many people who have been unable to make repayments for payday loans were not sold the product in the correct way. Those who already have bad credit history should not have been sold payday loans, yet, many were.
Over 64 million PPI policies were sold in the UK and it’s not known what percentage of these were mis-sold to consumers. The dramatic increase in payday loan claims could indicate that it is the “new PPI” — meaning thousands of people could be eligible for refunds from their payday lenders.
What Is the Role of Payday Loan Claim Companies?
Many claims companies are focusing their efforts only on PPI. However, with the deadline looming, these companies will need to offer their services for new types of claims. Claims management software, such as LogiClaim, can be used for multiple types of claims, from flight delays to mis-sold mortgages. However, it’s likely that some of these companies may diversify and stay in the claims market by helping customers make a case for a mis-sold payday loan.
Much like PPI, payday loan claim companies can make a complaint to the payday lender if consumers believe they should not have been accepted for the loan. Using evidence to prove how the loan was mis-sold, the claims company will contact the lender and state the case.
Thousands of people have been left in more debt after using the services of a payday loan company, unable to pay back the large interest rates.
Using claims software, such as that from Logican, payday loan claims companies can handle multiple cases and store all of the relevant information in one place. With accurate information from an individual, claims companies can strive to get a refund for clients.
Logican’s LogiClaim software can be easily adapted for different claims, allowing PPI claims companies to swiftly change to payday claims if they choose.
Our user-friendly claims software has helped many companies swiftly process claims. Request a free demo of LogiClaim to see if it could benefit your claims business.