16Oct

The latest results of a survey by consumer advice body Citizens Advice (CitA) reveal that the UK’s payday lenders appear to have made some small improvements in their practices. However, the proportion of firms completing each of the essential steps remains low in many cases.

CitA has now surveyed 5,333 payday loan customers since November 26 2012, the date on which the Good Practice Customer Charter came into force. The survey asks customers to rate their lender according to 10 important criteria.

The results are divided up into three periods: November 26 2012 to November 25 2013, April 1 2013 to March 31 2014, and April 1 2014 to August 31 2014. This last period coincides of course with the introduction of Financial Conduct Authority (FCA) regulation.

On seven of the ten measures, the overall score has improved, although none of these seven tasks were carried out in the majority of cases. In the period since April 1 2014:

• 50% of customers said their lender asked questions about their personal finances (up from 42% in the previous period)
• 36% extended their loan without being pressured into doing so (up from 32%)
• 26% said they had no difficulties in repaying their loan (up from 23%)
• 26% said they were treated sympathetically when in difficulty (up from 18%)
• 22% were made aware of the risks of extending their loan (up from 18%)
• 19% were offered a freeze on interest and/or charges (up from 16%)
• 19% were informed of sources of free debt advice (up from 10%)

In two more areas, the score for the period since April 1 2014 was unchanged from that recorded in the 12 months ending March 31 2013. Once again, 37% said the costs of extending a loan were made clear, and 16% said their personal finances were assessed before an extension was granted.

In only one of the 10 criteria did the score fall, however this is also the only criteria in which the majority of customers considered that the action was carried out. 75% said they were informed of the repayment amounts, compared to 79% in the previous survey period.

Gillian Guy, Chief Executive of CitA, said of the latest results: “Payday lenders are still not sticking to their word to treat people fairly. While things are moving in the right direction, some payday lenders are still falling far short of responsible lending. Customers need to have the full facts at their fingertips when making decisions about borrowing.”

She also called on the regulator to act, by saying: “The new rules should contribute towards ridding the market of irresponsible lenders, but this won’t be achieved by regulation alone. The FCA needs to use enforcement action to make sure firms flouting the rules are not allowed to operate.”

For more information on FCA compliance, visit our Compliance Training page.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.