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.

How to clear your council tax arrears with a trust deed

6th March 2018

If you’re worried that the council might take action against you for non-payment of council tax, entering into a Scottish trust deed can be a beneficial step. It stops legal action by all creditors included in the arrangement, and provides a ‘safe haven’ from which to regain control of your finances. As council tax arrears […]

Read more

How to restore credit rating after Scottish debt programme has been satisfied

5th March 2018

A debt payment programme (DPP) remains on your credit file for six years, along with other default markers and court judgments that have been made against you. This can seriously affect your ability to borrow for this period of time, and longer. Even if you can secure borrowing, lenders are only likely to offer unfavourable […]

Read more

I’ve received a Simple Procedure Notice of Claim – what now?

4th March 2018

If you owe a debt of £5,000 or less, your creditor may send you a Simple Procedure Notice of Claim. This is a relatively new procedure that was brought in by the Scottish government and commenced on 28th November 2016 – their intention being to make it easier to resolve debt disputes. So if you’ve […]

Read more

What is a Bankruptcy Restriction Order? (BRO)

1st March 2018

A Bankruptcy Restriction Order may be made against you if it’s believed that you acted dishonestly, recklessly or unlawfully before you were made bankrupt, or during your bankruptcy. Your Trustee will inform the Accountant in Bankruptcy (AiB), and if their suspicions are upheld, a BRO of 2-15 years can be made depending on the seriousness […]

Read more

What does the DAS Fair and Reasonable Test entail?

28th February 2018

Debt payment programmes (DPPs) are an intrinsic part of the Debt Arrangement Scheme, which allows you to pay off unsecured debt at an affordable rate. If a debt payment programme is rejected by one or more creditors, the DAS Administrator can apply their discretion on whether to approve the plan, after using a test to […]

Read more

How do I apply for a Debt Payment Programme (DPP)?

26th February 2018

If you’re struggling to pay your unsecured debts, a debt payment programme could help you to regain control of the situation, and become financially stable again. Debt payment programmes are a fundamental part of the Debt Arrangement Scheme (DAS) in Scotland, and allow you to repay over a longer period of time. These programmes involve […]

Read more