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The Credit Services Association (CSA)
11-03-2015
FCA publishes thematic review on high-cost short-term credit
The Financial Conduct Authority (FCA) have released the findings of their thematic review on high-cost short-term credit. Arrears and Forbearance in High Cost Short Term Credit was carried out to "improve standards in how high-cost short-term credit firms (HCSTC), sometimes referred to as payday lenders, collect debts and treat customers who struggle to repay".
Findings of the thematic review include:
Findings of the thematic review include:
- Some firms were engaging in misleading and unfair practices to seek payment from customers in arrears, for example, implying legal action would be taken when it wouldn’t; and misusing customer banking information.
- Poor management, poor recognition of customers with financial difficulties, failure to effectively direct people to free advice, where appropriate, and firms not giving all customers access to the full range of forbearance and repayment options.
- Repayment plans that were clearly unsustainable and subsequently failed;
However, a statement from the FCA said that the review "also showed that many firms have taken steps over the past 12 months to change behaviour and ensure that they are able to meet the FCA’s requirements".
The FCA reviewed a selection of smaller and large firms, representative of the payday market, including online and high street lenders. Information from the thematic review and ongoing investigative work will form part of the assessment of firms during the process for FCA authorisation.
The FCA reviewed a selection of smaller and large firms, representative of the payday market, including online and high street lenders. Information from the thematic review and ongoing investigative work will form part of the assessment of firms during the process for FCA authorisation.