Payday lenders say they fall victim to avalanche of bogus complaints from component company linked to famous Mark Kennedy
Complaints to the financial ombudsperson about payday lenders increased from just 3,000 in three months last year to nearly 11,000 in the same quarter of this year.
Lenders say it’s not their fault and blame companies seeking compensation for racking up complaints, often unfounded.
Almost half of the complaints addressed to the Ombudsman – 44% – were rejected.
“Claims management companies think payday lenders can be their new pot of gold, their new PPI,” one payday lender told me.
“Some of these people who complain aren’t even our customers, and others don’t have a valid complaint or want to move forward when we reach out to them.
“Only about 1% of complaints are founded. “
One operation blamed by lenders is Payday Refunds, which charges 36% of any compensation and has ties to a disreputable financial figure called Mark Kennedy.
Lenders say they receive many unfounded complaints from this company, and many go to the ombudsman, who charges lenders £ 550 per complaint regardless of the outcome, unless he decides to waive the charges.
I put payday repayments to the test by submitting a complaint against a lender using false details including a non-existent address.
Three hours later, Payday Refunds forwarded my false information to the alleged lender “to deal with a complaint against your company for the abuse of a payday loan and a general breach of obligations under the regulations of the Financial Conduct Authority” .
He continued, “Please also see our attached complaint letter which describes the complaint.
“If you have any questions about this attached complaint email, please respond by email to the same address and we’ll help you in any way we can.”
Despite the fact that I had not provided any proof of a loan, Payday Refunds subsequently emailed me saying, “To expedite your application and give it the best chance of success for you, we will. forward to the financial mediator in case your the lender is not helpful.
This would appear to violate the Rules of the Regulator of Claims Management, which state that compo-hunting companies must “conduct sufficient research on customers before submitting claims”.
Payday Refunds is a trade name of Direct Financial Claims Limited.
It was once owned by DC4 Ventures Limited, which in turn was partly owned by Mark Kennedy, 53.
In February, ownership was transferred to Carolina Costa, director of Direct Financial Claims.
Companies House records show that she shared the same address in Monaco as Kennedy.
A few days ago, Costa’s shareholding was transferred to another director, Vincenzo Vernon.
Kennedy was previously the director of the famous Secure My Money, which traded as the1loan. As I revealed in 2014, he scammed desperate people looking for credit, charging fees even when clients didn’t get loans and took fees without authorization.
Last year, Kennedy was banned from serving as a director for eight years, with the Insolvency Department describing Secure My Money as “like a shark feasting on a pool of the most vulnerable and financially troubled.”
Last July, the Financial Conduct Authority banned him from the financial sector, citing his “lack of honesty and integrity”.
I reached out to Payday Refunds and Mark Kennedy for comment and heard from director Vincenzo Vernon.
He denied filing complaints on behalf of clients without trying to obtain sufficient evidence and criticized lenders for not responding to requests for data made on behalf of borrowers, who may have been confused by the “blizzard. From different lenders.
“It would seem clear that you are being contacted by these payday lenders who have unreasonably sold high interest finance to the UK’s most vulnerable people,” he said.
“These lenders are trying every avenue they can to avoid being answerable for what they have done.”
He added that Mr. Kennedy’s role at Payday Refunds was limited to providing software.
The Consumer Finance Association, which represents the payday loan industry, says the cost of complaints to the ombudsman could bankrupt lenders.
The recently collapsed Wonga reportedly received 8,000 complaints against it via Payday Refunds.
“There has been an increase in complaints and this is reflected in the figures released by the Financial Ombudsman Service,” said a spokesperson for the Association.
“Unfortunately, as part of this trend, we are seeing disturbing tactics deployed by claims management companies that are not always in the best interests of clients.
“Business bankruptcy does not help people who want to access credit or those who think they have grounds to file a complaint.”
PS If you have a complaint, you can go directly to the payday lender – you don’t need a claims management company. If you are not satisfied with their response or if it has been more than eight weeks and you have not received a response, then you can bring your complaint to the financial ombudsman.
