self regulation: what does it really mean for consumers? hannah hollingworth campaigns officer,...

Self regulation: what does it really mean for consumers?

Hannah HollingworthCampaigns Officer, Citizens Advice

The problem

And

Examples

The Rules

Payday lenders must:

• hold a credit licence

• follow Office of Fair Trading Guidance

Self regulation

Good practice customer charterPayday and short-term loans

Holding payday lenders to account

How it worksAnswer survey

Answer No to any questions Answer Yes to all questions

Complain? Thank you

Yes No

Making a complaint Thank you & FOS

What we have found so far

3179 responses by the end of August 2013

Some positive results:• 80% were clear about total repayment costs• 85% were clear about how to repay their loan

Less positive results

• 38% were asked questions about their finances and whether they could afford the loan;

• 76% had problems repaying their loan

Of those who had problems repaying

• 18% felt the lender dealt with them sympathetically and positively

• 17% were offered a freeze on interest and charges if they made payments under a reasonable repayment plan

• Only 9% of respondents were told about the availability of free debt advice

‘Almost sure I'll have to take another out next month to be able to afford food and heating.’ 

‘They left recorded messages on my mobile

Xmas Eve, Xmas Day and Boxing Day to get

me to check my emails and then phoned me at

work demanding payment when I had already

told them I couldn't pay and had gone to a Debt

Management Company, then phoned me 10

minutes later on my mobile demanding

payment.’

‘I’ve asked to cancel the CPA and agreed a

planned repayment schedule yet they raid my

bank account on an almost daily basis which

my bank immediately disputes and refunds.’

What has changed?

• 19 payday lenders have left the market

• The FCA are consulting on a new rule book

• OFT has referred the payday loan industry to the Competition Commission.

• 13 payday lenders, have provided Citizens Advice Bureaux with escalation numbers

The FCA rulebook

The consultation includes rules for:•tighter affordability checks•limits on loan rollovers•limiting the use of Continuous Payment Authorities•borrowers being signposted to free debt advice•controls on advertising

How can we make things better for consumers now

and post July 2014?

What can I do?

• Ask your clients to fill in our survey

• Promote our film about Neil's payday problems

• Take action against irresponsible and misleading advertising

www.citizensadvice.org.uk/paydaylenders

hannah.hollingworth@citizensadvice.org.uk