Payday lenders still not playing fair, says FCA
March 13, 2015
Payday lenders are failing to treat their customers fairly even after 12 months of being regulated by the Financial Conduct Authority (FCA).
According to the authority, tightening of relevant rules and its increased scrutiny of payday lenders has helped create a greater customer-focus among firms in the sector but there remains plenty of room for improvement.
Of particular concern to the regulator is the sense that payday lenders are being heavy-handed and far from helpful when it comes to dealing with customers who are facing financial hardship and serious debt management problems.
“Too many firms have been failing to meet the requirements to treat customers in arrears fairly,” the FCA said in a recent statement.
Furthermore, the FCA made clear its view that “many” payday lenders are routinely engaged in what it calls “unacceptable practices”.
Crucially, the authority is concerned that payday lenders are not able or willing to recognise when their customers are in financial difficulty and they are largely failing to point heavily indebted borrowers towards advisory services that could provide helpful assistance.
“Our rules are designed to ensure loans are affordable; that customers who get into difficulty are treated fairly and that they are not pressurised into unaffordable and unsustainable repayment plans,” explained Tracey McDermott, director of supervision and authorisation at the FCA.
“This segment of the industry has, for too long, been in the spotlight for the wrong reasons. It is essential that the more customer-focused approach we have started to see is maintained and embedded as we go forward,” she said.
In recent months the FCA has been clamping down on the practices of payday lenders in the UK, with caps now in place on how much interest and what charges can be levied by credit providers on a daily basis.
Payday lenders are also soon to be obliged to ensure that their loan deals are featured on at least one price comparison website in the interest of customer awareness and market competitiveness.
Nevertheless, payday loans continue to be the source of very serious financial problems for thousands of indebted households across Scotland and the rest of the UK.
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