FCA says payday lenders are failing customers after 12 month review
Many of Britain's payday lenders are failing to treat their customers fairly, according to the Financial Conduct Authority (FCA).
After a twelve-month review of the sector's regulation that covered 60 per cent of the market, the FCA was left unsatisfied. The regulator said the payday loan industry was still playing host to "unacceptable practices".
A review of three firms revealed serious backlogs of important documents, leaving customers vulnerable to collection agents. The FCA highlighted some lenders' failure to point people in the direction of debt advice services and companies offering inflexible repayment schemes.
Unsustainable repayment plans that subsequently failed and misleading practices were found to have exacerbated already stressful situations.
However, many payday lenders have upped their game with senior management, training staff to spot customers in trouble and provide assistance.
Tracey McDermott, director of supervision and authorisations at the FCA, said:
Our rules are designed to ensure loans are affordable; that customers who get into difficulty are treated fairly and that they are not pressurised into unaffordable and unsustainable repayment plans.
This segment of the industry has, for too long, been in the spotlight for the wrong reasons. It is essential that the more customer-focused approach we have started to see is maintained and embedded as we go forward.
The real test for these lenders will be FCA authorisation where they will have to demonstrate exactly how much progress they have made if they want to remain in the market.