Payday lenders face new strict FCA rules from July 1st

[Legal Beagles]

Lenders will be banned from rolling over loans more than twice TV adverts for lenders will carry ‘risk warnings’ Archbishop says getting rid of payday lenders altogether would create a dangerous ‘gap in the market’ via Payday lenders face new strict FCA rules from July 1.     Risk warnings CONC 3.4.1 01/04/2014 FCA (1)*A […]

More...

[Amethyst]

Re: Payday lenders face new strict FCA rules from July 1st

Risk warnings

CONC 3.4.1
01/04/2014
FCA

(1) A firm must not communicate or approve for communication a financial promotion in relation to high-cost short-term credit, unless it contains the following risk warning:

"Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk".
(2) The risk warning in (1) must be included in a financial promotion contained in an electronic communication unless by reason of the limited space available on the medium in question it is not reasonably practicable to include the warning.
(3) Instead of the website address in paragraph (1), a firm may include the Money Advice Service's logo registered community trade mark number EU009695909.
(4) The risk warning must be included in a financial promotion in a prominent way.


CONC 3.4.2
01/04/2014
FCA

The Money Advice Service has granted a licence to use the logo referred to in CONC 3.4.1 R (3) for the purposes of that rule. The terms of the licence are available from the Money Advice Service.

[Wombats]

Re: Payday lenders face new strict FCA rules from July 1st

That's all well and good, and I'm very much in favour of it being spelt out in black and white to consumers that they risk a life of misery if they take out these loans. However, what are THEY doing to ensure they don't lend to people who cannot afford the repayments, or are unlikely to be in a position to afford the repayments.

IMO it is far, far too easy to get these loans when you have not got the ability to pay them back. I am aware of one person who was quite ill with mental health problems who took out over ten of these in one night and was still bombarded with messages offering further lending. Fortunately ALL the loans were written off as the person had not used the money for their own personal gain, but had actually given it away. They also had access to excellent specialist support which would not be available to many.

While the example cited above is extreme, there has to be more onus on the PDL companies to perform proper checks on borrowers before just lending money to them.

[Amethyst]

Re: Payday lenders face new strict FCA rules from July 1st

Conc 5.2 and 5.3 covers creditworthiness assessment before contract ( came in 1st April) http://fshandbook.info/FS/html/FCA/CONC/5/2

[Wombats]

Re: Payday lenders face new strict FCA rules from July 1st

Conc 5.2 and 5.3 covers creditworthiness assessment before contract ( came in 1st April) http://fshandbook.info/FS/html/FCA/CONC/5/2

Indeed, but just how rigorous is that? Not very IMO - effectively it can still be left to the PDL to decide without any credit checks, so nothing has really changed unless I'm missing something.