OFT - Pay day lender compliance review
As a trade association for credit unions, we do not have our own client cases but base our response on anecdotal accounts of malpractice which have been reported to us by our member credit unions who themselves have sought to assist their own members who find themselves in difficulties with pay day lenders. Examples of bad practices reported by our members include:
1. unsatisfactory assessments of a borrower's ability to repay and a failure to share credit referencing data on customers - the latter so widespread that the great majority of pay day loans do not appear in credit referencing reports and therefore are virtually undetectable if not reported by the borrower.
2. inadequate explanations of the product and the potential negative consequences of taking it out - particularly true of online operators that often do not have a clear method available to ask questions in advance of entering a loan agreement.
3. allowance of the repeated 'rolling over' of loans without the appropriate care being taken to assess how this obviously expensive way of borrowing is impacting the customer's financial circumstances.
4. an uncooperative and inadequate approach to the collection of debts which often sees the forcing through of payment authorities from payment accounts, even where requests for cessation have been received by the creditor.
The full response is available to download on the right