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Payday lender debt collection practices amongst the worst

10 Mawrth 2015

Citizens Advice has today said people’s experiences of debt collection practices from payday lenders are amongst the worst reported. The charity has called for the regulator to also look into bad practices around logbook loans and guarantor loans. A new report by the FCA into the debt collection practices of payday loan companies has found bad practices in all of the firms it reviewed.

Gillian Guy, chief executive of Citizens Advice, said:

“Some of the worst debt collection practices people tell us about come from payday lenders. People have sought our help after their lender told colleagues about their debts or pretended that they were bailiffs and threatened to seize belongings from their home. Important progress has been made since tougher FCA rules came in but many people are still falling foul of irresponsible lending.

“People are paying a high price for short-term credit when they take out a logbook loan and guarantor loan. As the worst payday lenders are forced out the market, the FCA must ensure that people are not being caught out by other high-cost lenders. Credit unions can form part of the answer for some borrowers, but high street banks have yet to play a much-needed role. Payday loan firms should only lend to people who they know can afford to pay back the debt, and must point those who can’t towards free debt advice.”

Citizens Advice provided evidence to the FCA's review, including examples of cases where people have been hounded several times a day by collectors, both at home and at work.

Between April and August last year, Citizens Advice’s payday loan tracker found that:

  • 19% of people were told how to get free debt advice
  • 26% were treated sympathetically by their payday lender if they ran into difficulty
  • 22% were made aware of the risks of extending a loan
  • Just half were asked any questions about their finances before being given a loan.

Notes to editors:

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.