MiniCredit, a short term loans company, has been forced to apologise to some of its clients after having threatening emails sent to them exposed in the media.
The lender had threatened to contact its clients’ employers if they didn’t pay up the loans they had taken out on time. One client was also told that her debts would be passed on to a “doorstep” collector if she didn’t settle her debts quickly.
The Office of Fair Trading has established a code of conduct for the instant cash loans industry which prohibits any type of action which could lead to clients being embarrassed, and a phone call to an employer would certainly fall within that definition.
The OFT is able to revoke licences if a short term loans company steps over the mark.
MiniCredit’s activities were brought to light when a 27 year old Manchester woman’s story was highlighted in the media. She had originally borrowed some money to help move flats, and then borrowed another short term loan when she couldn’t pay back the first.
The whole debt story got worse when Emma Burgess, the young woman, found that she had to keep borrowing from more and more short term loans companies until the situation got so out of hand that she contacted a debt charity service.
She was told that the loans companies should be told the true situation and that they would negotiate a repayment scheme which would allow her to reschedule her debt payments to clear the amounts owed. This she did successfully with every one of the payday advance companies, except from MiniCredit, which said they would contact her employer to talk to them about her financial situation.
Emma related her embarrassment sitting at her desk at work, worried stiff that somebody from MiniCredit was any time going to ring up the office and talk to her boss.
When MiniCredit was contacted by the BBC, the company spokesperson said, when pressed, that it was not company policy to send threatening emails or contact somebody’s employer and this would not happen again. It also said that, like other payday lenders, it was policy for the company to attempt to negotiate a debt repayment when some body had got seriously into debt.
Of the 1.2 million people in Britain who took out an instant cash loan in 2011, 100,000 of them were from MiniCredit. However, of all the complaints received about short term loans companies by the Financial Ombudsman Commission, more complaints were received about MiniCredit than any other company.