The government and the payday loan industry, in the form of the four trade associations that represent 90% of payday lenders, have agreed new guidelines to help ensure customers are getting the best service.
Under the agreement lenders have 1 month to add the new commitments to their existing codes of practice agreed My 24th 2012. Top Hat Money have already adopted these guidelines which include clear explanation of loan repayments, robust affordability assessments to ensure borrowers are suitable for a payday loan and help for customers who get into difficulty repaying their loans.
Top Hat Money are completely transparent regarding payday loan repayments, you can see a full table of our typical charges here. Our affordability assessments are already industry leading, we don’t want to put anyone in a position where they are trying to pay back a loan they cannot afford; we are committed to making sure we lend to the maximum number of people in the safest way possible and are always sympathetic to customers who may need to defer payment.
In the last week a number of payday loan companies, including Wonga, were told by the Office of Fair Trading – the agency that regulates all companies providing credit – that they must improve their debt collection methods. This was after unsympathetic loan companies had been sending letters to customers struggling with repayments accusing them of fraud.
These new guidelines have been welcomed by the business minister, Norman Lamb, by Sarah Brooks, director of financial services at Consumer Focus and by Gillian Guy, chief executive at Citizens Advice. Compliance with the new codes will be monitored by the trade associations themselves rather than by the OFT.
The OFT are continuing to investigate many payday loan companies after launching a major review of the payday loan industry earlier this year. However investigations by the OFT can take up to 2 years during which the company under investigation can continue to trade. If at the end of an investigation a company has its Consumer Credit Licence revoked that company can appeal, appeals may also take years to hear, during which time companies can still continue to trade.
For your own safety when taking out a payday loan, or any form of credit, you should always ensure the company you are dealing with have a valid consumer credit licence and adhere to any relevant codes of practice. You can check a consumer credit licence at the Consumer Credit Register.
Any website operating without displaying a Consumer Credit Licence or displaying someone elses Consumer Credit Licence on which they are not named are operating outside the law. They can change their charges and therefore what you owe without warning, they can sell your data, they have your address and can use whatever means they wish to make you pay up any time they choose. Companies not displaying a CCL may have had one in the past and had it revoked for behaving in this way, they may have applied for a CCL and been refused or they may have simply not applied for one despite the fact that it is against the law to provide loans or act as a broker for loans without one. Companies operating without a valid CCL are unlikely to be operating within these recently agreed guidelines.