Payday loan lenders customer negligence causing debt problems
A recent report has shown that many borrowers of payday loans from certain lenders have been threatened with fake legal action, including house visits and visits to their place of work.
Under the yearlong investigation by the Financial Conduct Authority (FCA), the report found that one lender sent letters to customers with the threat of court action, even though there was no intention to take the customer to court. Another lender had a failure with its IT systems which increased interest rates on customer loans making them more expensive, and other payday loan lenders failed to open letters from debt advisers, which were sent to inform them that the customer was experiencing financial difficulty and had sought debt help.
These failures have meant that customers are continuing to be harassed for payments and getting more into debt due to the negligence on the part of the payday loan lenders. It is a lenders duty to try to help their customers when experiencing debt problems, the most effective way is to advise them of debt charities, where they can get help for the debts. Unfortunately instead of giving advice many of these lenders are resorting to scare tactics to recover debts from those struggling with their finances.
“Payday lenders are failing some of the most vulnerable consumers,” said executive director of consumer watchdog Which?
The FCA investigation continues, and those payday loans lenders that fail to comply with new rules and guidelines will be closed down.