Member Article

Payday lenders are still dodging code says Minister

Consumer Minister Jo Swinson says she is concerned that payday lenders are not adhering to codes of practice, ahead of a major industry-government summit today.

Ms Swinson and a team of regulatory officials will quiz loans company bosses on what they are doing to make sure vulnerable consumers are not put at risk.

She said: “The industry needs to do so much more to get its house in order, particularly in terms of protecting vulnerable consumers in financial difficulty. I am concerned that the lenders are not living to the spirit or the letter of the codes of practice that they signed up to last year.

“This is why I will be launching at the summit a survey to review the effectiveness of the industry codes and customer charter. I expect to hear more on what they are doing to make sure consumers aren’t taking out loans that aren’t right for them.”

Payday lending bosses are due to appear before a panel comprising Ms Swinson; Minister for Welfare Reform Lord Freud; OFT chief executive, Clive Maxwell; and Financial Conduct Authority (FCA) chief executive, Martin Wheatley.

The Summit will discuss what measures the FCA could introduce to protect customers when it becomes the regulator next year.

Lord Freud added: “The unscrupulous practices of some payday lenders can place vulnerable people at risk.

“I am concerned about some companies using Continuous Payment Authority (CPA) to access borrowers’ bank accounts inappropriately and excessively. I am determined that payday lenders should not be able to misuse this system to recoup funds from vital benefit payments that should be used for essential spending, such as utility bills and rent.

“We are working hard to end financial exclusion, which is often the reason people turn to payday lenders. We are investing £38m in credit unions to provide a good value alternative to help people save and access loans if they need them.

“I hope this summit will address some of the problems with the industry, so lenders can meet their obligations to their customers.”

This was posted in Bdaily's Members' News section by Tom Keighley .