Payday lenders failing customers in arrears, says FCA

[Legal Beagles]

The payday industry is beginning to take a more customer-focused approach to its business, but a review of the first twelve months of the Financial Conduct Authority’s (FCA) regulation of the sector has shown that too many firms have been failing to meet the requirements to treat customers in arrears fairly.

http://www.fca.org.uk/news/payday-le...rears-says-fca

[Amethyst]

Re: Payday lenders failing customers in arrears, says FCA

We found unacceptable practices from many lenders, including failure to recognise customers in financial difficulty; failure to direct people to free debt advice; and firms offering inflexible repayment options. However, we also saw that many firms are making changes to improve, including changing senior management, training staff to deal with struggling customers and improving monitoring, compliance and managing risk.

Where we found rule breaches and unfair practices, we intervened swiftly to ensure failings were addressed and that firms improved their practices; firms have also agreed to pay redress to customers. In some cases our investigations are ongoing and we will consider what further action to take in due course.
What are the next steps

We have given feedback to each firm in our sample about the good and poor practices we observed in their businesses. In January 2015, we contacted all HCSTC firms to remind them that if they want to continue to conduct regulated consumer credit activities, they must demonstrate to us they are complying with the rules and treating customers fairly, including when customers struggle to repay a loan

Most firms that wish to continue engaging in regulated consumer credit activity have submitted applications for authorisation. We will scrutinise all HCSTC firms and those that cannot demonstrate that they meet our threshold conditions will be refused authorisation.


For ref:

http://www.fca.org.uk/news/tr15-03-a...rt-term-credit

http://www.fca.org.uk/your-fca/docum...er-hcstc-firms

http://www.fca.org.uk/news/ps14-3-fi...r-credit-firms

[wales01man]

Re: Payday lenders failing customers in arrears, says FCA

May this be the start of an overhaul of the whole loan/.debt industry it needs to be made to operate in a more fairer way to enable Businesses and their customers to be sure of exactly what happens in terms of Interest Repayments and Cost from the start.

At the same time the recovery of debt from default through to Court action and collection afterwards needs simplifying so there is no doubt about hat both sides are allowed to do to Collect or defend Debts

[Nibbler]

Re: Payday lenders failing customers in arrears, says FCA

Very quickly skim read that report and it confirms what we already know. Vast majority of the sector is rotten to the core, and will only change with both arms and one leg twisted behind their backs.

[Debt Camel]

Re: Payday lenders failing customers in arrears, says FCA

What is interesting is that Linda Woodall, Director of Mortgages and Consumer Lending at the FCA, published this article on the same day https://blog.moneyadviceservice.org....gling-to-repay, including at the end

"If you think that your payday lender hasn’t treated you fairly then you have a right to complain to the firm. If you are unhappy with the firm’s response you are entitled to complain to the Financial Ombudsman Service."

IMO this 'treating your fairly' applies not just to how you were treated when you told the lender you had problems, but also the issue of whether the loan was affordable, whether you should have been offered it, even if you did manage to repay it (possibly by taking out a loan from someone else.) So there is potential for large numbers of people to be putting in formal complaints and going to the ombudsman.