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Payday Lenders Trying to Improve

Written By On 29/05/2013

Short-term loans have come under extreme criticism once again. The Citizens Advice Bureau have looked into seven hundred and eighty incidents of reported abuse from payday loan lenders since last November.

These were cases that reported aggressive collection techniques and failure to be a responsible lender by not making enough effort to ensure the applicant can afford to repay the loan. They include payday loans that were offered to some people that were under the influence of alcohol or with mental health problems. They also include some loans that were offered to people under eighteen years of age.

At the beginning of March, the Office of Fair Trading imposed a twelve week deadline on the fifty largest payday loan lenders to improve their customer service. If they do not comply, then they will risk having their licences revoked.

By June, if the OFT feel that the lenders have not complied, then they will look to refer the market to the Competition Commission.

The Consumer Finance Association, the main body who oversee short-term lending compliance, say they are keen to resolve this as soon as possible. They state that their members have already put into place a tougher code of practice that is being monitored independently.

An example of lenders trying to comply can be found on some payday loan application forms. The loan providers that are trying to get onto this immediately have already added some extra questions about expenditure. The extra boxes to fill in will refer to mortgage or rental payments, credit payments, or any other expenses. This is to try and eradicate short-term loans being applied for by people that really cannot afford to.

Other examples include pay day websites having to show clearly on their home page their collection practice and implications of late or non payment, together with details regarding loan policy renewal.