Payday money lender firms have long been criticised for expensive interest levels and also apparent simplicity assisting the UK population with escalating numbers of debts, however now they may be on its way within hearth through a different viewpoint – their particular debt collection techniques.
Based on statistics and figures released by the OFT, one in six complaints pertains to how debts are being collected. The Financial Conduct Authority (FCA) has reported that only 1 in 3 payday loans is paid back late or not even paid at all. It is considered that these debtors are not being treated with the sensitivity or fairness necessary.
Consequently, the FCA is launching a full scale review of the debt collection techniques employed by payday lenders, with particular attention to how they handle the defaulters. One trapped in the payday debt cycle, it is considered very difficult to get out of hence the FCA’s particular interest in this area.
This is to include looking at how they communicate with those borrowers and how they propose to help them regain control of their debt, as well as how sensitive they are to each customer’s situation. As it stands, a lot of lenders are distinctly lacking in these kind of areas, and often pile on the pressure or call in debt collectors instead of offering viable or alternative solutions.
Unfortunately it is a common situation that many people find themselves in. Even though they realise that payday lenders are not the best option, sometimes they can seem like the only solution – particularly for those who have been declined for credit elsewhere, or if they only need a small amount to pay the bills that month.
Only last year, leading private Debt Collection Agency Frontline Collections said that they no longer considered payday ‘loans’ to be viable debts and labelled the entire industry as ‘unethical’.