Time on your side? When is it too late for an unaffordable lending claim…

Many customers have heard that there might be some time limits involved in making a claim, but might be confused by the complicated rules – or even heard different things from lenders, or friends and family who have made claims.

Let’s start with the most straightforward rule. The key date you need to know about is not 1964 (when The Rolling Stones released ‘Time Is On My Side’), but rather 2007. Or, 6th April 2007 to be exact. This is the date that the Financial Ombudsman Service had the power to look at consumer credit complaints. So if you think you were given a loan you couldn’t afford before 6th April 2007, you’re not going to be able to do anything about it now. Your lender is very unlikely to investigate the claim for you, and you wouldn’t be able to take it to the Financial Ombudsman Service either.

‘Something about 6 years?’

If you took unaffordable lending after 6th April 2007, it’s not quite plain sailing towards making a successful claim. You might have heard something about loans taken out more than 6 years ago. At Allegiant, we’ve seen examples of lenders not investigating loans older than 6 years because they’re ‘out of time’.

Whilst this ‘6 year’ rule does exist, it has an important second part: the ‘3 year’ rule. This means that for lending given more than 6 years ago, you may have a further 3 years from the date you became aware (or ought to have been aware) that you could make a claim.

This bit is tricky because, how do you become aware that you could make a claim? When does the ‘3 year’ part of the rule start ticking? Inevitably, it’s different for different people. Some people are told by friends and family about making a claim for unaffordable loans, and it might only have been then that the ‘3 year’ time limit starts for them. For other people, they might read something on the internet about unaffordable loans, and then realise they can make a claim. If you’re reading this now, it might be that your ‘3 year’ clock has just started ticking. Don’t worry too much – it’s still a long time to sort out your claim, and you will always have 6 years from when the lending was taken out regardless.

Out of time?

When customers get into financial difficulty with repaying a loan, many customers inevitably blame themselves for the mess they’ve got into. Often, for the ‘3 year’ part of the rule to start ticking, the customer not only has to realise that there’s a problem, but also that it’s the lender that caused the problem by providing the unaffordable loan in the first place.

So even a loan going into default might not be enough for the customer to realise they should make a claim against the lender for irresponsible lending, if the customer believes the default was their own failing.

The 3 year time limit is also unlikely to start when the lender provided its generic complaints procedure at the time of the lending. Afterall, if you don’t realise yet that something’s gone wrong, why would you think you needed to complain?

Some lenders will try to dismiss a claim out of hand if the lending was over 6 years old. And the lender may also say that they have limited information about the lending. But this won’t stop the Financial Ombudsman Service from considering each claim on its individual merits – and deciding whether the ‘3 year’ part of the rule means the claim can still be fully investigated.

If you are ever asked by Allegiant or the Financial Ombudsman Service when you became aware that you should complain about loans older than 6 years, it’s best just to give honest and detailed answers. And you’ll soon find out if time is on your side.