5 June, 2014
Following the release of the Financial Conduct Authority (FCA)’s Consumer Credit Research: Payday Loans, Logbook Loans and Debt Management Services report, Mike O’Connor, Chief Executive of StepChange Debt Charity, said:
“Too many people are falling prey to unfair practices by parts of the credit industry, as this report clearly shows. Society must rid itself of those who prey on the vulnerable.
“Day after day, we see examples of unscrupulous and damaging behaviour from payday and logbook lenders. There is clear evidence that firms fail to undertake affordability checks, charge extortionate interest rates and late fees and deliberately mislead customers. The consequences for individuals and their families can be devastating.
“People who turn to high-cost credit are often vulnerable, and think they have no other options available to them. Many are hit by sudden life events which come with unexpected costs, or are constantly living at the very edge of their budget. They turn to credit simply to try and make ends meet. It is wrong that they should then be led into a spiral of debt by the poor behaviour of these firms.
“People need to know that there is someone they can trust who they can turn to for support in getting their finances back on track. People who are struggling with problem debt should never pay for debt advice and instead turn to charities such as Step Change Debt Charity.
“This report clearly shows that fee-charging debt management services are not meeting this need although they are keen to market their services to desperate consumers looking for “any port in a storm”. The lack of transparency in this market place is leaving customers confused, open to exploitation, and let down by incorrect advice and unnecessary charges.
“The evidence is all there: the regulator must end practices and products that harm consumers and ensure that people are given breathing space to deal with their debts in a manageable way. Going forward, we must do more to encourage saving to deal with life’s up and downs and to ensure that help is at hand.”