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FCA asks payday lenders to review compensation handling

The FCA has written to payday lenders and urged them to review their lending activity to see if their creditworthiness assessments are compliant.

In a letter addressed to chief executives, it sets out how the watchdog expects payday lenders to handle issues linked to the increase of complaints about unaffordable lending.

If deficiencies are found the FCA says firms should take action to ensure on-going lending activity is compliant and consider whether proactive redress may be required.

It also wants payday lenders to inform the regulator if they are unable now or in the future to meet their financial commitments because of any remediation costs.

The letter notes the Financial Ombudsman Service has recently published four examples of determinations of individual complaints about payday loans to illustrate its approach to the issues raised in those complaints.

If these are relevant the FCA says firms should take these examples of determinations into account as part of establishing their own effective procedures for handling complaints.

FCA director of supervision for retail and authorisations Jonathan Davidson says: “Firms will, though, need to review their policies and procedures, and how these have been implemented, to ensure that they are compliant, and can evidence this.

“They should also keep their policies and procedures under review to monitor compliance on an ongoing basis.”

The issue of payday lenders resurfaced in August when Wonga had put itself into administration after talks with the regulator failed to save the firm from the brink of collapse.



Payday lender Wonga collapses into administration

Payday lender Wonga has put itself into administration after talks with the regulator failed to save the firm from the brink of collapse. Wonga raised £10m from shareholders four weeks ago but is still unable to meet outstanding compensation claims. A source told The Times yesterday that the FCA was in talks with Wonga, formerly […]

FCA holds crisis talks with ailing payday lender Wonga

The FCA is holding meetings with prominent payday lender Wonga, as the troubled company could delay its fall into administration, according to reports. The watchdog has stepped in to hold crisis talks with senior Wonga staff over the expected appointment of administrators, The Times reports. Wonga raised £10m from shareholders a month ago but still […]


Complaints against payday lenders soar by over 200%

Complaints against payday lenders referred to the Financial Ombudsman Service have risen by more than 200 per cent over the last year. In its annual review for 2016/17, published today, the FOS says new complaints against payday lenders increased 227 per cent, from 3,216 the previous year to 10,529. The FOS upheld payday loan disputes […]

Royal Court of Justice High Court 480

FCA evidence throws Sipp provider court case into doubt

The FCA has asked if it can submit a new legal argument as Sipp provider Berkeley Burke continues its pivotal legal challenge to a Financial Ombudsman Service ruling against it. The FCA provided evidence in the case, acting as interested party to the judicial review, as it could inform the future appoach from regulators over what […]


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