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BBC News – Payday complaints double in two years, says watchdog
Complaints about payday loans have more than doubled in the last two years, according to the Financial Ombudsman. The service took on 794 new complaints in the year to April 2014, compared with 296 in 2012. The financial watchdog also warned that many other people might have been too ashamed to come forward and make […]
Cap on credit
However, the number of complaints is still tiny, in comparison to the total number of loans.
The Competition and Markets Authority (CMA) recently calculated that more than 10 million loans were taken out in 2012.
Last month, it ruled that a lack of competition between lenders could be costing customers up to £60 a year.
The Consumer Finance Association (CFA) - which represents some of the lenders - said it was committed to new rules that came into force on 1 July.
Lenders can now extend - or "roll over"- a loan on a maximum of two occasions.
There is also a limit on how many times they can use a Continuous Payment Authority (CPA) to take money automatically from a borrower's account.
Unless a CPA is successful in extracting the money owed, it can only be used twice.
The Financial Conduct Authority (FCA) is expected to announce details of a proposed cap on the cost of credit provided by payday lenders next week.
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StepChange Chief Executive Mike O’Conner said: 'The payday loan industry has been a problem for many years. Unaffordable lending, the misuse of continuous payments to drain money from customers’ accounts, the rolling over of loans and inflating debts with additional charges have been commonplace and damaging.
'The fact that most complaints against payday loan companies are upheld is further evidence that when it comes to acting in the best interests of consumers, in many cases they fail to do so.
'We know that payday loans are often a last resort for people who are already in serious financial difficulty. We urge anyone struggling with any form of debt to get free and impartial debt advice at the earliest opportunity.'
Read more: http://www.thisismoney.co.uk/money/a...#ixzz36s4YcZiQ
Cap on credit
However, the number of complaints is still tiny, in comparison to the total number of loans.
The Competition and Markets Authority (CMA) recently calculated that more than 10 million loans were taken out in 2012.
Last month, it ruled that a lack of competition between lenders could be costing customers up to £60 a year.
The Consumer Finance Association (CFA) - which represents some of the lenders - said it was committed to new rules that came into force on 1 July.
Lenders can now extend - or "roll over"- a loan on a maximum of two occasions.
There is also a limit on how many times they can use a Continuous Payment Authority (CPA) to take money automatically from a borrower's account.
Unless a CPA is successful in extracting the money owed, it can only be used twice.
The Financial Conduct Authority (FCA) is expected to announce details of a proposed cap on the cost of credit provided by payday lenders next week.
More...
StepChange Chief Executive Mike O’Conner said: 'The payday loan industry has been a problem for many years. Unaffordable lending, the misuse of continuous payments to drain money from customers’ accounts, the rolling over of loans and inflating debts with additional charges have been commonplace and damaging.
'The fact that most complaints against payday loan companies are upheld is further evidence that when it comes to acting in the best interests of consumers, in many cases they fail to do so.
'We know that payday loans are often a last resort for people who are already in serious financial difficulty. We urge anyone struggling with any form of debt to get free and impartial debt advice at the earliest opportunity.'
Read more: http://www.thisismoney.co.uk/money/a...#ixzz36s4YcZiQ
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