Know your Rights while Borrowing Money

Know your rights

Borrowing is the easiest way to manage your financial mess only if you have borrowed wisely. London has remained as one of the most prominent trades and business centres for ages now. Since the year 2013, the financial service industry of the United Kingdom has witnessed considerable strategic challenges to redefine the future shape of regulation. With the abolition of Financial Services Authority, a new and polished act came into force on 1 April 2013 by the name of Financial Conduct Authority (FCA). This action has an aim of increasing the accountability of an individual. Internal work culture and business practices of many financial firms in the UK market needs to be changed or rectified. The financial regulatory authority ensures that firms which are operating in the market should put the customer in the center of everything. The new standards and policies set by the FCA are molding the traditional finance practices to safeguard the interests of the customers.

These changes which are implemented by the FCA have a major influence. Borrowers have certain rights while they are borrowing a loan from any broker, lender or credit union. The rights do not apply if an individual has chosen an illegal lender or broker for the loan borrowing process. When an individual opts for a loan, he is asked to enter into an agreement with the lender or broker which includes the legal or statutory rights under the Consumer Credit Act.

Know your Rights! Your rights include:

  • You must know all the information before and after signing up a credit or loan agreement so that you have a clear cut idea of the terms and conditions.
  • Whether or not you can cancel the loan agreement, if yes, the procedure to cancel the agreement and all related details.
  • You must know if you opt to pay off the loan amount early as promised in the agreement.

FCA authorized lenders or brokers should also be transparent in their dealings so as not to attract any penalties. Not being transparent to the customers may also lead to cancellation of their license or authorization status. Brokers or lenders must ensure that their customers are given all the required information in the process.

What Information should be given to Borrowers?

Lenders or brokers should categorize their information into pre-contract information and post-contract information. It’s a legal document which needs thorough reading and analysis by the borrower and this may take some time. In order to provide some time to your customers, send them the pre-contract information beforehand to avoid last-minute hustle. Information that should be given to individuals who have opted for loan:

  • A brief information about your company or organization
  • Details of the product or service which has been chosen by the borrower
  • Credit amount opted by the borrower and loan amount being provided to him
  • The total interest rate levied on the loan amount
  • Repayment modes
  • Payment due date
  • Statement generation date

All such information will help the borrower to plan and manage their loan in a swift and hassle-free manner. We will advise our readers to ask for this information before they enter into a loan agreement.

How to Protect Yourself

Customers should be given the highest priority but sometimes, mishaps take place which left us clueless in the middle of nowhere. To know how to make your way out of the problematic situations, you should be aware of your rights.

  • Be Alert

Stay vigilant to fraud or scam. If you sense something wrong, contact your broker or lender to get a clarification on the matter. If at all, the answers don’t satisfy you and you want to go one step further. Reach out to not-for-profit organizations for free, impartial and confidential loan borrowing advice. The advice you receive will be unbiased and free.

  • Check Your Statements

Make a habit of checking your statements regularly. Highlight any mistake in the statement immediately to the broker or lender for correction. If you do not get any satisfactory result, report it to the FCA or contact them on their consumer helpline number.

  • Be Aware of Scams

Keep an eye on any possibilities of scam. Be aware of scams and traps which may lead you deeper into your financial mess. Authorized brokers or lenders do not ask for any upfront fees. Scammers may even inform you that the fee is refundable but will advise you to deal with FCA registered brokers and lenders who do not charge any upfront fees.

Check Whether a Financial Firm can Offer Loan or Not

As already mentioned-above, FCA has a consumer credit register listing that has financial firms operating in the market of the United Kingdom having an ‘interim permission’ to offer loans, credit, and other financial services and products to the consumers. To check whether or not a financial firm has interim permission from the FCA to conduct business or offer a loan, you need to have the below-mentioned details:

  • Name of the financial firm
  • Postcode
  • Firm Reference Number

Once you are in the hold of all these data, you may visit www.fca.org.uk and check the consumer credit register to find out about the firm.

Apart from this regular search, these details will also assist you to find out the contact details of the firm. You may also get to know the trading names or trading styles adopted by the firm. Moreover, you may find these advantageous to know what types of activities are covered under the FCA authorization which will prove to be supportive in choosing your broker or lender.

In case, you find any information missing or incorrect, you can also report it or register a complaint with the Financial Ombudsman Service. This legal team has been set up by the Parliament to reconcile situations or disputes that arise between financial dealings and consumers.

If you feel like canceling the agreement due to any given reason, you can go ahead with the cancellation within 14 days of signing it up. You do not have to state your reasons for the cancellation. You can a notice to the lender or broker stating that you are no longer interested in the loan and would be canceling the agreement. A borrower doesn’t have a right to cancel an agreement if the loan amount is small i.e., £50 or less (except hire purchase or conditional sale agreements) or £35 or less where the agreement was made away from the lender’s offices.

Paying Off Early

Paying off the loan early always works in favor of you. Under the Consumer Credit Act, if an individual is paying off a loan early, then the person will get a rebate of any interest and charges that he had paid. For processing the same, you must write to the lender and in ask for the lender to inform you the total amount you need to pay to clear off the debt. The lender will have to answer that within 28 days of receiving your request. If the lender doesn’t send any response to your request, you are suggested to contact a specialist adviser immediately.

Failed Repayments

If you fail to make repayments, you will receive an arrear notice from the lender which must include a Financial Conduct Authority (FCA) information sheet. The sheet will have all the necessary details about your rights which will help you to sort out the arrears.

Always remember that if a lender doesn’t give you the right information, they are not allowed to take you to court.

Take help in case of financial dealings from not-for-profit organizations such as Money Advice Service, Citizens Advice, FCA, etc.

 

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