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Credit: Interest Rates

Answer

The Department for Business, Innovation and Skills carried out two surveys over the summer to test how well payday lenders have been complying with their customer charter and improved codes of practice.

The first survey was targeted at payday lending customers and we received over 4,000 replies. The second survey was aimed at payday lenders and 44 lenders responded.

On 3 October, BIS published a report setting out the findings of the survey. This report can be found at:

https://www.gov.uk/government/publications/payday-lending-research-reports

The report confirms that, overall, most payday lenders are failing to comply with the key provisions of the charter and codes of practice. On none of the key measures tested do consumers say that industry is complying fully. There were particularly poor customer responses when it came to some key features of payday loans, notably on rollovers and the use of continuous payment authority and also when it came to how lenders treat consumers struggling to repay their loans. Consumers generally rated smaller lenders less well than larger lenders in living up to the code commitments.

The results of the surveys show that self-regulation in the payday sector has not been working across the board. The Government strongly welcomes the tough new rules announced by the FCA on 3 October:

http://www.fca.org.uk/news/firms/consumer-credit-detail

They will provide targeted interventions to address the key problems highlighted in our report—with new rules in the regulation of advertising, affordability checks, rollovers, and use of continuous payment authority.

Secondary information

Type

Written question

Reference

170490; 568 cc551-2W

Session

2013-14

Subjects

Codes of practice Consumers Credit Interest rates Loans Trade associations

Link

View this Written question on www.publications.parliament.uk