Payday lender failings uncovered by CAB - Loans - News - Moneyfacts


Payday lender failings uncovered by CAB

Payday lender failings uncovered by CAB

Category: Loans

Updated: 28/05/2013
First Published: 28/05/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Failings by payday lenders have once again fallen under the microscope, following an eye-opening study by the Citizens Advice Bureau (CAB).

Twelve weeks after the Office of Fair Trading (OFT) launched its investigation into the payday loan industry, the CAB has found many firms' continued unscrupulous practices, such as harassing customers who are in debt and pressurising them to extend their loans, are harming customers.

Analysing 780 individual cases between 26 November 2012 and 13 May this year, the CAB found that in 87% of instances, payday lenders did not request documentation from customers to prove they could repay the loan amount.

An additional 72% of companies were found to have placed pressure on customers who were already struggling to repay their loan, to extend it, whilst 95% failed to check whether they could afford repayments if an extension was carried out.

Over 24,500 people contacted the CAB regarding payday loans over the same six-month period.

The findings have prompted the CAB to call on the OFT to take "swift action" to protect consumers.

Gillian Guy, chief executive of the CAB, said: "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.

"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," she said.

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