Regulator plans crackdown on payday lenders’ debt collection
PAYDAY lenders must be sensitive when collecting debts from borrowers who are struggling, the City watchdog warned today, saying those who are not will be pushed out of business.
The Financial Conduct Authority takes over responsibility for regulating payday lenders on 1 April and said its first priority is reviewing debt collection practices.
“One in three loans go unpaid or are repaid late so we will be looking specifically at how firms treat customers struggling with repayments,” said FCA boss Martin Wheatley. “These are often the people that struggle to make ends meet day to day, so we would expect them to be treated with sensitivity.”
Industry leaders welcomed the new probe, arguing the lenders who have not kept up with best practice should be made to improve.
“We support action to tackle poor practice, but we urge the FCA to use its proposed price cap on credit to tackle excessive default fees and charges which are used by the least reputable lenders,” said Russell Hamblin-Boone, boss of the Consumer Finance Association.