The City watchdog yesterday accused payday lenders of unfair practices, particularly when dealing with people in debt.
The Financial Conduct Authority’s thematic review marking a year of its regulation of the high-cost credit sector revealed “unacceptable practices from many lenders, including failures to recognise customers in financial difficulty, failure to direct people to free debt advice and firms offering inflexible repayment options”.
The FCA found serious non-compliance and unfair practices in all firms it reviewed. Its investigation revealed three firms were still hounding vulnerable people for debts even after they gave medical evidence and letters from debt advisers about why they were failing to pay.
However, the regulator said many firms have taken steps to change behaviour, including changing senior management, training staff to deal with struggling customers and improving monitoring, compliance and managing risk.
Tracey McDermott, a director at the FCA, warned: “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.”
Citizens Advice said people’s experiences of debt collection practices from payday lenders are among the worst reported. “People have sought our help after their lender told colleagues about their debts or pretended they were bailiffs,” said Gillian Guy, the charity’s chief executive. “Important progress has been made... but many people are still falling foul of irresponsible lending.”Reuse content