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Payday lender suspends debt collection calls after FCA action

Payday lender Cheque Centre has permanently exited the single instalment payday loan market and has suspended debt collection calls following action by the FCA.

The lender will no longer sell loans which must be repaid in one lump sum.

In a voluntary arrangement with the FCA, Cheque Centre has also suspended debt collection calls to customers until it has reviewed and improved its processes, and has agreed to amend its policies and procedures to ensure they are fully aligned with the FCA’s rules.

In addition, the firm will retrain its staff on treating customers fairly.

The FCA says poor practice at the lender was identified by the Office of Fair Trading, which regulated the consumer credit sector until 1 April.

In late March Cheque Centre was sent a letter setting out the FCA and OFT’s “serious concerns”.

FCA chief executive Martin Wheatley says: “This is an early victory for people that use payday lenders. We made our tougher expectations clear to Cheque Centre and they have wasted no time in making changes.

“I have said before that firms would need to dramatically improve their operation or exit the market, and we are now seeing that happening.

“This is an important step in the right direction and other payday lenders should take note.”

Cheque Centre will be required to carry out a skilled persons review to ensure the necessary improvements have been made.

The lender has 451 branches across the UK.

A Cheque Centre spokesman says: “The FCA made clear their expectations under the new rules and we offered to make immediate changes. One of the decisions we made was to accelerate our exit from payday lending. The transfer to the new regulator was the perfect time to make the change and we are now out of the payday market.

“We are also listening to our customers, and in the future we are going to concentrate on our significant foreign currency business, new and existing longer-term loan products as well as traditional pawnbroking services.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 13th May 2014 at 3:26 pm

    Let’s face it, PayDay Lender is basically a euphemism for Loan Shark and how is a Loan Shark firm going to train its staff to TCF?

    Unless or until the FCA subjects Loan Shark firms to the same standards to evidence suitability as those to which regulated mortgage advisers are subject, things aren’t likely to get much better for people so desperate for a few quid that they’re prepared to borrow money at an astronomic rate of interest.

    What about affordability, ATR, CFL, a cap on interest rates, an assessment of all the applicant’s other financial obligations, the purpose for which the loan is required and all those kinds of things? Anything less is just picking at the edges of the problem.

  2. If you read the firm’s requirement on the FCA website, it also says they’ve stopped all consumer lending and pawnbroking while they retrain etc.

    Given their latest published accounts (2012) show them relying on parental support already, the staff and premises costs they’ll have to cover with very little revenue won’t be pleasant to bear.

  3. I’m not certain that the core “product” is the problem, rather the lack of diligence in checking the ability of those who take out the loans to pay them back in the timeframe set out. The typical customer of the likes of Wonga is likely someone who cannot get credit elsewhere. If even one of the high interest credit cards is out of reach then they will likely have either a very poor credit history or a low or unstable disposable income, possibly both. This adds up to being the sort of application which should be subject to the decision of an underwriter with the applicant having to prove their ability to repay. I very much doubt that this happens with any of the payday loan companies, who likely as not make more profit from defaulters. That said, this is a two way street, and there has to be an element of responsibility on the borrower’s part too. Stopping the ads might help, as might a statutory “cooling off period” in any loan contract. Here are some interested points http://speedyloansearch.com/payday-loans/

  4. Very often speaking of the loan sharks we fail to realise that the applicants are actually responsible for their decisions and agree to use the services of the lending companies and signing the papers they assert they are eager to pay all those interest rates charged by the firm. It’s personal responsibility of a borrower to choose a reliable company for himself and to be careful as to every small printed letter in the documents.

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