MSE News: Payday lenders are failing customers in arrears

Former_MSE_Paloma

Payday lenders are "failing customers in arrears" and using "unacceptable practices", a review of the market has found ...

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Payday lenders are failing customers in arrears




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fermi

FCA's own news release and documents.

FCA News story - 'Payday lenders failing customers in arrears, says FCA'

The FCA found serious non-compliance and unfair practices in all firms that it reviewed, leading to poor outcomes for many customers and in some cases, serious detriment and financial loss.

The FCA found further examples of actions that may have exacerbated already stressful situations, including:

• repayment plans that were clearly unsustainable and subsequently failed
• firms not dealing appropriately with issues when things went wrong, for example staff failing to investigate or acknowledge complaints and customers having to explain their situation multiple times as a result of poor record-keeping
• firms engaging in misleading practices to seek payment from customers in arrears
• systems failures resulting in incorrect balances, fees and charges erroneously added, and in some cases, duplicate payments being taken.

Where situations of non-compliance were uncovered, the FCA has intervened quickly to get firms to take specific steps to ensure the failings are not repeated in the future. In some cases, investigations are ongoing and the regulator is working with firms to determine appropriate levels of redress for those affected. In a number of cases, our investigations have led to the FCA commissioning an independent skilled person’s review of a firm’s practices, at the firm’s own expense, or we have restricted the ability of a firm to do business until improvements are made.

Technical release summary - TR15/3: Arrears and Forbearance in High-Cost Short-term Credit

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.

Technical release actual report (pdf) - TR15/3: Arrears and Forbearance in High-Cost Short-Term Credit

Apples2

In other news, Payday boorowers continue to avoid repaying.

Looks like the New World Order of checking applicants still has some way to go.

Oblivion

'Payday lenders are failing customers in arrears'

I have no particular liking of payday lenders but I think this headline really should read 'Customers in arrears are failing payday lenders.'

When you take out a loan you've entered into a contract. failure to repay that loan in the agreed timescale is clear breach of that contract.

Stevie_Palimo

Apples2 wrote: »

In other news, Payday boorowers continue to avoid repaying.

Looks like the New World Order of checking applicants still has some way to go.

Agree with this and whilst I work within this field there are plenty of Company's that do use less than friendly ways to collect on debts but there are still lots of people that use the services with no intention of paying back what they have borrowed.


I do not think things will change in this market at any point soon and as for suggestions of easier credit for people in need of quick cash well that will not solve the issues either.


There is a number of factors involved with this and basically I believe that people who are in financial difficulties can not be policed when applying for loans as most of the payday loans on offer do not require a credit check so basically people are then spiralling into further debt.


With this in mind you cannot blame the payday lenders fully and I strongly believe that it is poor education of money management and also the rather complex system of benefits that can sanction people at the drop of a hat without any sort of back up and they then look towards these types of loans and get themselves further into a mess.


Having watched the channel 4 documentary last night to see that the universal credit system now in place does not like to advise claimants of any emergency funds that are on offer you can see why people who have no other choice other than to turn to a payday loan and whilst the cost may be quite high if you choose not to repay on time if you do borrow from most of them ie:- £100.00 for 30 days it is only around £20-£25.00 as a fee for this and putting this against OD charges and the likes will always be a cheaper option.

fermi

FCA's own news release and documents added above

[Deleted User]

Really does strike me it's in part it is to do with the Media and likes making out "oh it's only an online shark" as if it makes it quite alright not to pay

I want to the day to come when it will be just as bad to not pay a credit card on the time or even have that as a form of credit! - I kind of get banks have already started to recall overdrafts of the folk who would probably have judged us once upon a time that used 'payday loans' better late then never, way hey!

People should have no excuse under the new system where you pledge to repay and are under more 'self assessment' then there ever was before - in fact I'm quite proud I took one lender's repayment and based all that I owe/am due to pay around it!! (until a Judge says otherwise, that that is a different story)

[Deleted User]

Wasn't there talk of a register for the payday borrowers? where if you took one out then that should have stopped you getting another