Discretionary Commission Arrangements - Complaints and Refunds
Yorkshire-based Naylors Finance was established in 1978 as a doorstep lender (it was originally J&R Naylors of Wakefield until 2012). They provide, small, unsecured loans with up to a 12-month repayment period. They claim that since starting out over 40 years ago in Wakefield, they have expanded to cover the whole of England, Scotland and Wales.
Doorstep Loans (also known as Home Credit or Home Collected Credit) is one of the original forms of consumer credit in the UK, and its basic premise is that there is personal contact between the borrower and lender (in the form of an agent). Millions in the UK have used or still use this rather old-fashioned method of lending to bridge a shortfall in their income. So, if you apply for a doorstep loan, rather than everything being assessed online, an agent (typically freelance) working for the lender will visit you in your home! During this visit, the agent will ask about your personal circumstances, ask to see evidence of your financial situation, and then endeavour to put together a specific financial package suitable for your needs. Typically, customers who apply for a doorstep loan are unable to get a loan from traditional High Street lenders, due to having a poor credit history or unreliable income etc. In addition, a doorstep loan will be an attractive option to those who are mobility challenged and would find it difficult to get around to visit a bank, don’t have a bank account or who are intimidated by an online situation, and much prefer the human touch provided by having an agent visit their home.
In order to move with the times, the most progressive lenders now use online services to advertise their business and generate loan enquiries. There are, however, some doorstep loan companies who still use uninvited methods to create business by “cold-calling” potential borrowers at home; it is not advisable to invite these cold-callers into your home as their sales tactics may well mean that you end up taking out a loan that you cannot afford. The best way to engage with a doorstep lender is to make initial enquiries online that are assessed immediately by the lender who will then, if they believe they can lend to you, make contact to make an appointment for an agent to visit your home.
During this home visit, a much more detailed evaluation of your income and outgoings will be carried out so that the agent can assess the “affordability” of the loan, which is absolutely key. If the agent establishes that you can afford the loan, they will make you an offer (and should at the same time explain in detail the terms of said loan), and, in many cases, will hand over the cash at the end of the visit.
Another difference with doorstep loans is that repayment schedules often stretch from fourteen weeks all the way up to twelve months. These repayments are fixed, meaning that you have a better chance of managing your finances, and an agent visits your home every week to collect your repayment. In addition, repayments are usually small and manageable, and in cash. As it is typically the same agent who visits each week, once can see how a relationship can build up, and certainly it seems from reviews that most borrowers do have a good working relationship with their agent, and this in turn will most definitely give rise to a very loyal swath of borrowers who often stay with their doorstep lender for many years, taking out further loans whenever a loan has been paid up.
As mentioned above, those who use a doorstep lender are usually saddled with adverse credit for various reasons, and Naylors Finance even welcome customers who have County Court Judgements (CCJs) against them or are in arrears with other loans companies. Because of these high-risk individuals, interest rates are very high compared to “normal” unsecured loans.
A typical doorstep loan usually charges between 300% and 400% APR; on Naylors Finance website they state that, along with a minimum term of 27 weeks and a maximum term of 52 weeks, their maximum APR is 602%.
I used their little loan calculator bit on their website just to see how much it would cost me for a small loan of £200 (the minimum they will lend) for a period of 27 weeks (minimum term) and it gave me a weekly repayment of £12 (a nice small manageable amount) which works out that I would be paying interest of £124, so a total to repay of £324 – a whopping APR of 602%! Now, I am assuming that someone who has nowhere else to turn when it comes to topping up their income to pay bills, buy food etc, will simply look at a small weekly payment of £12 and a nice friendly chat (and possible cup of tea) with Dave or Donna the agent will not look at the total amount they will be repaying. It is actually quite heart-breaking to know that those who can least afford it, will pay this much extra just to put food on the table, but when times are hard, I guess that they are just grateful to be able to borrow at all. This high interest will of course ensure that as soon as that original loan has been paid off, the borrower will have to take out another straight away as the interest they have been paying will have prevented them from saving anything going forward, and so a vicious cycle ensues.
Despite many Naylors Finance customers apparently being quite happy to be charged the equivalent of an arm and a leg to borrow money, a great deal of them are now becoming aware that, regardless of how friendly the agent is, and how easy it is to get them to agree a loan, even if you have no income from a job, but from benefits etc, many of these doorstep loans are being mis-sold. This essentially means that the customer cannot afford to pay off the loan without further getting into debt, perhaps having to take out additional loans to be able to pay for household bills. If the salesperson/agent, did not fully disclose the terms of the loan (or explain it in a way which the customer could easily understand), especially the interest rate and how much the loan was actually costing, then the loan may have been mis-sold. Many customers have complained about Naylors Finance, claiming that while they could afford the weekly repayment, they then couldn’t afford to pay their gas bill, or buy enough food for their family; if this is the case, then it is more than likely that the agent mis-sold the loan. Claims Management companies like Redbridge Finance are finding that more and more people who have had a doorstep loan are complaining that they should not have been given the cash in the first place as it would have been clear from their bank statements etc that they could not afford to pay an extra £100-£200 on top of the original loan repayment.
Naylors Finance have also been criticised for moving away from the traditional in- person service (probably as a result of the COVID 19 situation where physical contact with someone outside of your bubble was forbidden); many of their customers have been with them for over 15 years and have complained about the introduction of the online service and “app”. It’s not hard to imagine that if you have been doing the same thing for 15 years (I dread to think how much interest these people will have paid over the years), that to now have to deal with your account online can cause great anxiety, especially amongst those who are older.
I can usually get a good feel for how a loans company operates by perusing the online reviews; it is very interesting that most of the negative reviews for Naylors Finance are not about their super high interest rates (they should be!) but about how upset customers are at not being able to chat to the agents in their homes, not being able to informally ask their agent for another loan which is sorted out there and then based on previous good management of the loan (i.e. repayments made on time), and not being able to take advantage of the food and Christmas Hampers scheme which I believe has now been discontinued. Their positive reviews reflect the unique feature of doorstep loans, this being the personal weekly visit - so many customers say that they “trust” the agent and hence the company, which is why they will remain loyal and not look anywhere else for a loan.
If you have or have had a doorstep loan from Naylors finance or any other home credit company and have found yourself in even more financial difficulty, you may have been mis-sold the loan, and if you complain, you may be entitled to a refund and/or compensation.