Dot Loan Brand Owner Cancels Loans After Breaches
Shelby Finance has not provided a summary of loan statements to more than 15,000 customers as required by law.
Three violations occurred between August 2018 and July 2019, with Shelby Finance reporting them to the CMA in September 2019.
The AMC concluded that the violations may have negatively affected customer decision making and will continue to monitor the lender to see if other violations occur.
Summary of the loan
Under the Payday Loans Market Inquiry Order 2015, payday lenders are required to provide their clients with a summary detailing the costs of their borrowing at specific times in the loan cycle.
These statements inform clients of the fees associated with their borrowing, giving them the ability to make informed decisions about their loans.
If a lender does not send statements to clients, they are prohibited from providing loans. Shelby Finance continued to issue loans despite non-compliance with the order’s regulations and that is why AMC took such a severity of the breach.
A total of 15,218 clients were affected by three breaches between August 2018 and July 2019, and Shelby Finance canceled around £ 520,000 in loans for clients who were affected by the first breach.
What future for Shelby Finance?
The AMC has warned that it will keep a close eye on Shelby Finance’s future activities, although it is happy with the new measures put in place for compliance and how the lender has acted to redress the situation.
In addition to canceling the loans, the lender provided late loan summaries via email and retrospectively made them available online. Self-reporting violations also likely helped Shelby Finance avoid further sanctions.
Although the payday lender is not one of the best known in the UK, its business name Dot Dot Loans has been active since 2017.
They offer long term loans and quick loans starting at £ 200 with repayment periods of three months and more.
Learn more about alternatives to payday loans in this guide.
Payday Loans Sector
The AMC’s criticism of Shelby Finance is the latest in a long line of problems faced by payday loan companies since new rules were established in 2015.
Lenders are now forced to cap the amount of interest and fees charged to borrowers, the total cost of those who are not allowed to exceed 100% of the amount borrowed.
In addition, the rules on affordability checks have led to a record number of complaints, with borrowers successfully claiming that they have mis-sold their loans.
All of this has led to an exodus of payday lenders from the UK market. Wonga was one of the most publicized victims of 2018, but has since been followed by QuickQuid and PiggyBank.
Just last week, Sunny became the last payday loan company to call on directors, again in part because of the weight of the historic complaints it faced.
Complaints to the Financial Ombudsman Service (FOS) showed a 130% increase in payday loan complaints and a 360% increase in installment loan complaints in 2018/2019.
The most recent figures for 2019/2020 show a 63% year-over-year decrease in payday loan complaints, but installment loan complaints are up 111%.
Walruses Club PLC, owner of Shelby Finance, had a relatively low number of complaints to the FOS in the second half of 2019-54 compared to 2,897 complaints against Sunny’s owner during the same period that contributed to its collapse.