Payday lenders piling on pressure
Guy said: “Payday lenders are still failing to treat their customers fairly and check that loans are actually affordable.
“Citizens Advice evidence reveals 62% of loans come without proper checks to establish whether the borrower is able to repay the loan.
“It’s not just the original loan that is the problem. We’ve found that, in 7 in 10 cases, people have been put under pressure to rollover loans.
“Consumers also complain about being pestered with offers of more loans once their first loan has been paid off.”
Citizens Advice also said that the lender’s advertising does little to show the hardship that irresponsible lending can cause.
Guy said: “All too often adverts mask the real hardship caused by irresponsible lending. Payday loans should come with a health warning containing information about the costs and the impact of taking out a loan.
“At the BIS committee today lenders revealed they can refund money to consumers who have been left in financial difficulty after a repayment by a continuous payment authority.
“Customers need to know this is a real option instead of being left to drown in debt.
“The new rules planned by the FCA will help to protect consumers from predatory payday lenders. It’s essential the proposals make it into the rule book and are adhered to.”
Citizens Advice is calling on people to ‘get mad about the ad’ by reporting irresponsible adverts to the Advertising Standards Authority.
An in depth analysis of 665 payday loan customers who contacted the charity’s consumer service between January and June 2013 found that 32% (201 people) had complaints about CPAs.
Of these it found that nine in ten could have grounds for a complaint to the Financial Ombudsman Service.
It also found that one in five was already in financial difficulty or on a debt management plan and that one in six had money taken without their authorisation.