Discretionary Commission Arrangements - Compaints and refunds


Drafty is owned by GAIN Credit LLC, who also own Lending Stream, a short-term lender. Drafty are different to their “sister” company Lending Stream, as, rather than offering short term loans, they offer a line of credit, also known as “revolving credit”, which they describe as an “exciting alternative to loans, overdrafts and credit cards”.

What is a Revolving/Line of Credit?

This is a type of credit that does not have a fixed number of payments and allows the user to make multiple withdrawals and repayments throughout the length of the agreement. This credit model has a fixed interest rate which is typically paid daily. There is a minimum monthly payment requirement. A good example of revolving credit is a credit card.

On Drafty’s website, you are encouraged to apply even if you have “bad credit” and they claim that the process is as “simple as pie” (eating it, not making it, apparently – the spiel about pie is, imho, quite cringy, but I am sure that they paid plenty of money to some young and trendy marketing company for it and I’m sure it works to draw their target market in). Drafty also use the Open Banking system as part of their lending model, more on this below.

Are there any disadvantages in using revolving credit?

Yes – compared to a traditional instalment loan, the user is charged a higher interest rate – the flexibility that the user has (no fixed repayment deadline for example) are fundamentally riskier for lenders, and so, higher interest is charged. Another disadvantage is that there could be the temptation to spend more than you can really afford, with impulse purchases for example, as the user may have the mindset of “I’ll worry about paying it off later” or “I only have to pay the minimum amount so I can afford it”, when, in reality, interest charges are being applied daily to the amount left unpaid, and will mount up.

One other point to note is that if you pay for purchases using your line of credit from Drafty or any other similar provider, rather than a credit card, you do not have Section 75 Consumer Credit Act Purchase Protection; it is worth bearing this in mind if planning an expensive purchase.

What is Open Banking?

As mentioned, Drafty use the Government-backed initiative (don’t let that put you off) introduced in 2018, which was designed to give consumers control over banking information. With your express permission, companies such as credit providers (like Drafty) can use your banking data to make “informed” lending decisions, making the process much quicker; and don’t worry, lenders can only read your banking information, they cannot move or touch your money or add anything to your records.

More about Drafty

To be considered for a Drafty line of credit, you need to be over 18 and in employment, earning at least £1250 a month, and be a resident of the UK, with an active bank account and debit card. Drafty will lend between £50 to £3000, over a 1 to 60 months period.

A Drafty line of credit costs 0.18% per day, so in interest, you would pay 18p per £100 borrowed, per day. As they state on their website,

For ease, if you ever need a helping hand, Drafty costs £5.40 to borrow £100 for 30 days”.

Clearly this is cheaper than a Payday Loan (most Payday lenders provide loans at the FCA price cap which is currently set to a daily interest rate of 0.8%). However, realistically, the majority of Drafty’s customers are not going to only want to borrow £100 for 30 days, and it is somewhat disingenuous to use this as an example, albeit an accurate, factual one. The chances are, the majority of customers will be wanting a larger line of credit, over a longer period of time, and to be fair, Drafty do point out “…the longer you borrow for, the more interest you'll pay”. On the other hand, they do encourage a longer-term loan by saying “As long as you repay the minimum monthly amount each month, you can choose how long you want to borrow for”.

Complaints about Drafty

As with other types of loans, e.g., payday, guarantor, as well those offering revolving credit, many customers are complaining that they were offered a line of credit when it should have been evident from looking at their credit history/bank account statements, that they would be unable to afford to make the repayments without getting further into debt, and that the lender was irresponsible to lend to them in the first place, or in allowing them to have increased credit limits. As one customer complained, “Withdrawing the maximum available month to month to pay priority bills not a hint?”. Customers have complained to Claims Management Companies, including Redbridge Finance, that their bank accounts (which Drafty would have observed through Open Banking) would show that they already had large levels of financial commitment, or had loans with other lenders or had a gambling addiction, all, or any of which should have determined that they should not have been lent any money.

There are also complaints that customers did not realise that interest is added daily as a percentage of the loan balance, or that it is too easy to be repeatedly given a credit increase (apparently only if the account is managed well according to Drafty) and not be aware that this would increase the interest paid.

How can Redbridge Finance help if I think I was mis-sold a loan with Drafty?

If you believe that Drafty did not undertake sufficient in-depth checks to see if you could afford the loan, then we can help by assessing your claim to see if you were mis sold the service they offer. Or if you feel that you have been treated unfairly, for example if your financial circumstances have changed, and Drafty did not try to help you in any way, then please go to www.redbridgefinance.co.uk and register.

Our claims experts can take on your case and make a claim for a full refund of all the interest and any charges that Drafty have levied. If you want to make a complaint, the process is very straightforward. All you need to do is sign up on our site, and let us know which lenders you want to make a claim against. We then assess the information you have provided and take your claim forward by making a complaint on your behalf. We deal with the responses from Drafty, and of course will keep you informed every step of the way. As one of the complaints from customers is that Drafty do not answer their phones or respond to emails, Redbridge Finance can remove that headache for you, as we are very experienced in getting a response from even the most awkward lenders!

If you have had problems repaying your loan or think you might have been mis-sold a loan, then you could be entitled to a refund. Contact us today by going to www.redbridgefinance.co.uk and signing up, and we can assess if you have a claim.