Government continues strong action on payday lending
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Government is seeking feedback on how the payday industry meets the standards set out in the voluntary codes.
The government has launched two new surveys at the ministerial summit in July 2013 to address concerns in the payday loans market. These surveys aim to check how well payday lenders are meeting the standards set out in the industry codes implemented last November.
The surveys include:
- a consumer survey
- a business survey which should be circulated to lenders via trade associations
Both surveys will close on 14 August 2013.
If you’ve taken out a loan, take part in the consumer survey.
We have also appointed Ipsos MORI to conduct qualitative research into how payday lending advertising affects consumer behaviour.
The announcements were made at the ministerial summit on payday lending on 1 July 2013. Consumer minister Jo Swinson chaired a panel with:
- Sajid Javid, Economic Secretary to the Treasury
- Lord Freud, Minister for Welfare Reform
- Clive Maxwell, Chief Executive, Office of fair trading (OFT)
- Martin Wheatley, Chief Executive, Financial conduct authority (FCA)
Key lenders, trade associations and consumer groups, and other interested parties including regulatory and independent bodies attended the summit.
It included a frank exchange of views about priorities the FCA could focus on to reduce consumer harm in the industry when it becomes the regulator in 2014. There was broad agreement that the key areas should include advertising, rollovers, use of continuous payment authority and affordability checks. The next step will be a consultation by the FCA in September 2013 about their new rulebook.
If things go wrong for you as a payday lending customer, contact the Financial Ombudsman Service. This is a free and independent service to help settle individual disputes between businesses that provide financial services and their customers.
Consumer Minister Jo Swinson said:
This week’s summit provided a good opportunity to take stock of progress since March and discuss what we do next to better protect consumers and address the many problems we are still seeing.
I am pleased that the OFT’s enforcement action is bearing fruit – we are seeing lenders who are not prepared to up their game exiting the market. Moving forward, OFT will continue with this tough action. The FCA will have even stronger powers to clamp down on poor practice from next April and will set out their thinking on new rules in September. We also look forward to hearing the outcome of the Competition Commission’s investigation into the payday market.
I welcome the fact that industry representatives signalled a willingness to work more closely with the debt advice charities to identify and better understand why things are going wrong. This is a helpful step. I also encourage people who have taken out a loan to take part in our survey so we can assess how the lenders are living up to the promises they made last year.
Payday lenders remain on notice – government and regulators are working together to protect consumers by stamping out irresponsible lending behaviour in this market.