Citizens Advice exposes payday lenders’ failings as OFT closes in on unscrupulous lenders

[Michael Browne]

New evidence from Citizens Advice finds 7 in 10 put under pressure to extend loan.

 

Citizens Advice is urging the OFT to take tough and immediate action against payday lenders as new evidence reveals lenders are pressurising struggling borrowers to extend loans, lending to people under 18 and harassing people in debt.

 

The new findings, from the Citizens Advice’s payday loan tracker and evidence from across the service, are revealed today, Tuesday 28 May, 12 weeks since the OFT launched its investigation into the payday lending industry.

 

Citizens Advice found that 12 in 14 promises to treat customers fairly were broken. It also found 3 out of 4 people struggled to repay the loan (1,539 cases) with 84% saying lenders did not offer to freeze interest rates or charges, despite vowing to do so.

 

Citizens Advice wants the OFT to use its powers to immediately ban payday lenders its investigation finds are causing harm to borrowers. An in depth analysis of 780 cases reported to the Citizens Advice consumer service between 26 November and 13 May revealed evidence of:

 

• Irresponsible lending: lending to under 18s, people with mental health issues and people who were drunk at the time.
  
• Inadequate checks on borrowers: chasing people for debts when the loan had actually be taken out by someone else using their identity.
  
• Taking more than owed: lenders taking more than they are owed then refusing to refund it.
  
• Draining bank accounts: misuse of Continuous Payment Authorities by persistently raiding bank accounts without any warning leaving no money to live on.
  
• Harassment: pestering people who are in debt and also hounding others at the same address in a bid to shame the borrower.
  
• Refusal to agree to repayment plans: not helping people who are struggling to repay by agreeing a reasonable repayment plan.
  

During the same six month period 24,575 people sought online advice about payday loans from Citizens Advice. The Citizens Advice payday loan tracker studied customer feedback on 2,000 payday loans, from 113 different payday lenders, from 26 November 2012 to 17 May 2013. The tracker monitors whether lenders are abiding by their own customer charter. The study did find that lenders are being much clearer about how much loans will cost in total (79%).

 

But major failings unveiled by the study include:

 

• 87% didn’t ask the borrower to provide documents to prove they can afford to repay the loan.
  
• 58% did not warn that a payday loan should not be used for long-term borrowing or to deal with money troubles.
  
• 84% of people who had repayment problems were not offered the chance to freeze interest and charges when they were struggling to pay it back.
  
• 7 in 10 (72%) actually put pressure on people struggling to repay to extend their loan.
  
• 83% did not highlight the risks of extending the loan to those already in difficulties with their payday loan.
  
• 95% did not check that borrowers with repayment problems could afford to pay back the loan if it was extended.
  

Citizens Advice Chief Executive Gillian Guy said:

“The payday loan industry is out of control and is acting as a law unto itself. It has showed a complete disregard for its customers. Many have been driven into debt by irresponsible lending and their debts ballooned as lenders put pressure on them to extend the loans.

”The OFT has an opportunity to wipe out the distress caused by this industry and make sure it is transformed into a responsible short-term credit market. It is vital that, following the investigation, the OFT takes swift action to protect consumers from the harm caused by these unscrupulous lenders.”

Last month Citizens Advice called on high-street banks to offer personal micro-loans as a responsible alternative to a payday loan.....

 

Read more from today Report: Citizens Advice exposes payday lenders’ failings as OFT closes in on unscrupulous lenders

[toptrapper]

The moral of the story being - ensure OFT are aware of the conduct of these sharks.

[Wintry]

Hi

 

It will be very interesting to see just how close the OFT actually get to doing something about the practices as outlined in the CAB article.

 

The evidence is there, its nothing new, everybody knows what is going on.

 

Come on OFT, its not rocket science.

 

Wanna bet that nothing will really change?

 

My opinions

[sillygirl1]

Hopefully some action will take place, ie the complete closure of certain 'Parent' companies who have a load of PDLs listed in their Companies House details as 'other services'.

 

A certain company in particular comes to mind who have horrible adverts, (not the Kerry Katona ones, they've already banned those adverts).

 

All mainstream advertising for these firms should be banned too.

[renegadeimp]

One licence, one name. There is absolutely no need for one company to have a dozen or more trading names like QQ have.

[sillygirl1]

Thats what I have been saying for ages - one licence, one name. Its not only QQ who are guilty of this.

[Wintry]

Hi

 

More on problems with Payday Loans from Insolvency News / National Debtline -

 

http://www.insolvencynews.com/article/15313/corporate/payday-calls-soar-at-national-debtline

[sillygirl1]

Its about time a report came out from the OFT as to who is being closed down.

[Wintry]

Its about time a report came out from the OFT as to who is being closed down.

 

Hi

 

How high the moon:)

 

Maybe its just my cynical mind and something substantial will be done.

 

Cant see it though on past experience..... not until code red crisis point anyway.

 

My opinions

[Wintry]

Hi

 

Latest on this from the BBC that is doing the rounds -

 

http://www.bbc.co.uk/news/business-22687648

 

It is starting to get a touch embarrassing now if you ask me.

 

Makes you wonder how it will all 'pan out' from here.

 

My opinions

[sequenci]

Always bang on the money.

 

I can't see much changing - especially when you consider just how close certain PDL companies are to the Government.

 

An audience with Dave anyone?

[Wintry]

Always bang on the money.

 

I can't see much changing - especially when you consider just how close certain PDL companies are to the Government.

 

An audience with Dave anyone?

 

Hi Sequenci

 

The pressure does seem to be mounting, trouble is that we have been here before and...nothing

 

How much evidence and misery will it take?

 

Imagine some of the team meetings (presuming they have them) on marketing, commission and sales? I yearn to be a team leader:)

 

Little or no regard for the potential effects? - famliies, the vulnerable and communities, I feel sick inside just thinking about it.

 

It comes back to the out of touch thing again

 

Like I have said, code red

 

My opinions again as always

Edited May 31, 2013 by Wintry

[Wintry]

Hi

 

This one takes the breath away, but then again should we be surprised?

 

A wi gonna do oat abaaat it OFT or just more of the usual?

 

http://www.mirror.co.uk/news/uk-news/bedroom-tax-payday-loan-firms-1926746

[renegadeimp]

Always bang on the money.

 

I can't see much changing - especially when you consider just how close certain PDL companies are to the Government.

 

An audience with Dave anyone?

 

100% agree. I think the daily mail did a write up last year about one owner of a group of PDL's that donated a fair amount to cameron, and shortly after we had the speech that interest rates will not be capped on PDL's.

[renegadeimp]

Hi

 

This one takes the breath away, but then again should we be surprised?

 

A wi gonna do oat abaaat it OFT or just more of the usual?

 

http://www.mirror.co.uk/news/uk-news/bedroom-tax-payday-loan-firms-1926746

 

Doubtful the OFT will do anything since its getting closed down and merged with another agency next year.

[Wintry]

Doubtful the OFT will do anything since its getting closed down and merged with another agency next year.

 

Hi

 

Yes, good point.

 

The new 'set up' are going 'open things up' for consultation between the usual suspects as to how it will all work so I last heard.

 

The PDL companies might pull out all the stops while the cats are all tied up in the above.

 

In the meantime maybe the OFT will start wasting time from the throw in's:)

 

Having said all that, the pressure does seem to be mounting in places

 

Only time and perhaps events will tell

 

My opinions

[sequenci]

Hey Wintry. I'm totally with you on this

[Wintry]

Hey Wintry. I'm totally with you on this

 

Hi sequenci

 

Yes, affirmative, thanks

 

Not a surprise though as I was under the impression that you were with me on everything:)

 

Its the truth isn't it???

 

Never believe the truth though sequenci, ask the SC people that one!

 

Quite sure you know what I mean:)

[sequenci]

Not a surprise though as I was under the impression that you were with me on everything:)

 

 

I seem to be

[Wintry]

I seem to be

 

Hi

 

And the charming at PP

 

betcha we get there though:)

[sillygirl1]

Apparently one of the football clubs has pulled out of a propsective deal with Quick Quid.... it was on the news very briefly the other day.

[zydeco]

http://www.bbc.co.uk/news/uk-england-manchester-22791288

 

"Whilst we anticipated some negative responses from the initial agreement, we underestimated the adverse reaction to the sector of business in which the sponsor operated. We undertook significant research into QuickQuid and were satisfied that they were a regulated and responsible lender."

[sillygirl1]

Thanks, the research obviously did not involve reading the posts on CAG, or, if they did read them they were dismissed as 'insignificant in the bigger picture'.

 

If the dreaded Wonga become a bank I will NOT be one of their customers,

[Wintry]

Hi

 

University payday lender action in the news

 

http://www.insolvencynews.com/article/15357/personal/three-universities-join-payday-advertising-ban

[Wintry]

Thanks, the research obviously did not involve reading the posts on CAG, or, if they did read them they were dismissed as 'insignificant in the bigger picture'.

 

If the dreaded Wonga become a bank I will NOT be one of their customers,

 

Hi sillygirl

 

Might not the quote below from the bbc article change your mind ?

 

"The Consumer Finance Association, which represents lenders including QuickQuid, said pay-day loan firms were a "positive choice for people from all walks of life".

 

Maybe the CFA are seeing things different. its the truth isn't it???

 

Unbelievable aren't they?