Brokers have slammed the new independent supervisory body for payday lenders as “toothless” as it has no power to revoke firms’ consumer credit licences.
The Consumer Finance Association has established an independent body, the Short-term Lending Compliance Board, to oversee payday lenders. It has appointed former Banking Code Standards Board chief executive Seymour Fortescue as chairman.
The SLCB will have the power to sanction lenders for non-compliance, including public naming and shaming, however, it will only supervise lenders that have voluntarily subscribed to the CFA and its code of practice. The SLCB will have the power to expel firms from the CFA, which may result in a referral to the regulator.
Your Mortgage Decisions director Martin Wade says: “Unless this body can actually stop firms from trading it is absolutely toothless. If it expels a firm and that business can keep its consumer credit licence and carry on practicing, it clearly does not have the power neccessary to stop bad practice.”
Trinity Financial product and communications director Aaron Strutt says: “People are crying out for regulation of this sector at the moment but this is not it.”