Watchdog gets tough on payday loans

There was great news yesterday for those of us who want the payday lender market cleaned up. The 451-branch Cheque Centre has effectively been forced to scrap payday loans by new Financial Conduct Authority rules and the firm has also suspended its debt collection calls.

This is a major move by the City watchdog, which took over regulation of the high-cost credit sector just last month. I haven’t been confident that it would be able to back up its promises to crackdown on rogue lenders but it seems to be doing just that.

Yesterday FCA chief Martin Wheatley kept up the tough talking while sending out a fresh warning to payday lenders that don’t play fair by customers.

“This is an early victory for people that use payday lenders,” he said. “We made our tougher expectations clear to Cheque Centre and they have wasted no time in making changes. I have said before that firms would need to dramatically improve their operations or exit the market, and we are now seeing that happening. Other payday lenders should take note.”

Under the agreement with the watchdog, Cheque Centre will stop selling single instalment payday loans altogether and has suspended debt collection telephone calls to customers until it has improved the way it does so.

Meanwhile a rival payday lender has today had its ads banned. Payday Unlocked, owned by Nouveau Finance, has been slammed by the Advertising Standards Authority over a series of irresponsible text messages.

One of the annoying and unsolicited messages promised £400 in 15 minutes while another promised “£200 today”.

The ASA concluded that the ads were irresponsible and warned the company to “ensure that their future advertising was prepared with a sense of responsibility to consumers and society”.

I’d like all advertising that encourages people to take out loans they can’t afford to be banned. But failing that, I’m happy to see high street firms move out of payday lending.

s.read@independent.co.uk

Twitter: @simonnread