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Payday lenders have refused to act following our legal letters to reduce their default fees. We're now calling on the financial regulator to intervene.
We're calling on the Financial Conduct Authority (FCA) to get tough with the payday lenders we believe are charging excessive fees for late payments. We wrote to the lenders in January 2014 but have received no commitment for action from the lenders themselves.
Which? executive director, Richard Lloyd, said: 'It's outrageous that lenders are charging excessive fees which tip people into further debt.'
The FCA takes over the regulation of the credit industry from April 2014. Tackling fees that push people into spirals of debt must be top of its task list.
Tipping people further into debt
Our investigation found 10 of 17 leading payday lenders with default fees of £20 or more. Four lenders charged £25 or over, with Wonga topping the table at £30.
We believe that such excessive fees are unlawful under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). This regulation states it is unfair for lenders to charge a disproportionately high fee if borrowers default on a loan.
High charges are one of the biggest factors that tip borrowers into a spiral of debt - so we believe it's time for action. You can help by signing our petition.
