19 May, 2015
In response to today’s announcements by Wonga and the Financial Ombudsman Service, Mike O’Connor, Chief Executive of StepChange Debt Charity, said:
“The payday lending industry has caused enormous damage in recent years. We are hopeful that the Financial Conduct Authority (FCA) crackdown means that the sector can become part of a responsible credit market, but we must remain vigilant for new forms of exploitation of financially vulnerable people.
“The answer to financial difficulties is rarely ever more borrowing, especially dangerous high-cost forms of credit like payday loans. People struggling with debt need to be given breathing space, which includes protection from interest, charges and aggressive enforcement to help them regain a sound financial footing.
“Despite welcome moves by the FCA to improve the transparency of credit brokers, the Financial Ombudsman’s figures show that further reform of the sector is clearly needed. The banning of upfront fees to ensure that borrowers cannot be charged when no loan is provided and tighter controls on who brokers share personal data with, in order to protect financially vulnerable people from a potential barrage of calls and texts are essential steps in bringing this market under control.”