Payday loan companies have made millions of pounds worth of unaffordable loans over many years. The Claims Management Company TheClaimsGuide.com is seeing faster responses for complaints against payday lender Lending Stream.

Since the introduction of high-cost loans, lenders have made money by lending to borrowers at extortionate interest rates. This led to huge profits for the lenders who expanded aggressively. One issue with this is that many borrowers who resort to using high-cost loans do so because they can't afford to borrow. This is partly why the lower-cost lenders won't lend to them.

The Financial Ombudsman (FOS) states regarding affordability: "The relevant rules, regulation and guidance all refer to a borrower being able to sustainably repay any credit provided. And being able to sustainably repay credit is described as doing so without undue difficulty, while being able to meet other commitments and without having to borrow further."

To grow faster, many payday lenders did not perform the proper checks required to ensure the loan was affordable. These checks should not only be based on the borrower's responses to income and expenditure, as this is sometimes misstated. Lenders should be making their own checks (e.g. viewing bank statements) to ensure the borrower isn't getting into financial difficulty.

The claims made against high-cost lenders for irresponsible lending have led to financial problems for many previously profitable lenders. This includes the high-profile collapse of payday lender Wonga in 2018. More recently there have been ongoing difficulties with guarantor lender Amigo Loans, who are trying to set up a scheme to survive. Morses Club has also recently announced an increase in claims against them, following a controversial CEO departure and sale of his shares.

The FOS make the final decision on any claim where the lender and borrower can't agree. Among the lenders with a high uphold rate by FOS is Lending Stream. Lending stream is a high-cost payday lender that offers short-term loans of £1,500 with an APR as high as 1,333%. In their latest numbers, the FOS upheld 70% of complaints against Lending Streams owner Gain Credit LLC. This compares to an average of 47% for all banking and credit claims.

TheClaimsGuide.com is seeing quick settlements and payouts for many Lending Stream claims, meaning more customers don't have to wait long periods to receive their payout. This is partly because the lender has decided to settle claims themselves and avoid them going to the FOS, resulting in a fee for the lender.