The FCA has announced that it will conduct a thematic review into the arrears management practices and treatment of borrowers in difficulty by payday lenders and other high-cost short term lenders. The review will be one of the very first actions the FCA takes as regulator of consumer credit.
The review will look at how payday lenders and other high-cost short-term lenders treat their customers when they are in difficulty. This will include how they communicate, how they propose to help people regain control of their debt and how sympathetic they are to each borrower’s individual situation. The FCA will also take a look at the culture in each firm to see whether their focus is truly on the customer or whether it is simply orientated towards profit.
Beyond the review, the FCA states that it will also:
- pay a visit to the biggest payday lenders in the UK to analyse their business models and culture;
- assess the financial promotions of payday and other high-cost short-term lenders and move quickly to ban any that are misleading and/or downplay the risks of taking out a high-cost short-term loan; and
- consult on a cap on the total cost of credit for all high-cost short-term lending in the summer of 2014, to be implemented in early 2015.
Martin Wheatley, FCA chief executive warned that there “will be no place in an FCA regulated consumer credit market for payday lenders that only care about making a fast buck.”