The Consumer Finance Association has set up an independent body to oversee standards in the payday lending market and appointed former Banking Code Standards Board chief executive Seymour Fortescue as chairman.
The Short-term Lending Compliance Board is responsible for supervising a monitoring and compliance programme that includes auditing of payday lenders through KPMG and monitoring standards and enforcing the CFA’s code of practice, introduced in November.
It will work to identify gaps and deficiencies in the code that could lead to consumer detriment and advocate change in relation to new regulatory developments and emerging issues.
The SLCB will have the power to sanction lenders for non-compliance including public naming and shaming, possible expulsion from the CFA and referral to the Office of Fair Trading and, from 2014, the Financial Conduct Authority.
Fortescue is supported on the panel by lawyer and financial regulation expert Robert Rosenberg and consumer advocate Nick Lord.
The body will oversee any lender that applies for CFA membership.
Consumer Finance Association chief executive Russell Hamblin-Boone says: “We have responded to criticism of the payday industry by setting up this new independent panel to ensure that lenders signed-up to the CFA’s code meet their commitments and deliver and exceed the standards of service that consumers get in other areas of financial services.
“Concerns about aspects of the payday industry are well documented. We have listened and we have acted.”
Fortescue says: “The Short-term Lending Compliance Board will have a zero tolerance approach to bad practice and will be using all of its powers, whenever required, to ensure the CFA’s members are measuring up to the Association’s code and that consumers are getting the protection they deserve. We shall pay particular attention to issues such as proper credit appraisal, preventing repetitive borrowing, transparency of charges and fair treatment of customers in financial difficulties.”
