Hackney Citizens Advice Bureau (CAB) advises many people in debt and finds that many have payday loans.
A payday loan is a short term loan intended to tide you over until you get paid. Most payday loan lenders must follow a Good Practice Customer Charter.
They should check certain things and give you certain information before lending to you.
Lenders who have signed up to the Code have agreed to:
- treat all customers fairly and with care, correcting any mistakes quickly and courteously, and compensating customers for any reasonable losses they may cause
- explain in clear language the terms and conditions of their service
- never encourage customers to borrow more than they need, and check that they can afford to repay, considering their ability to meet other expenses or loan repayments
- offer to change repayment terms so you can pay the outstanding debt in a manageable manner if you are having significant repayment difficulties.
A detailed check of 780 cases reported to the national Citizens Advice Consumer Service between 26 November and 13 May revealed evidence of:
- Irresponsible lending, eg lending to under 18s, people with mental health issues and people who were drunk at the time
- Inadequate checks on borrowers, such as chasing people for debts when the loan had been taken out by someone else using their identity
- Taking more than they are owed, then refusing to refund it
- Draining bank accounts through misusing Continuous Payment Authorities leaving no money to live on
- Harassment, such as pestering people who are in debt and also hounding others at the same address in a bid to shame the borrower
- Refusal to agree to repayment plans when people in debt needed more time to pay
If a payday lender doesn’t follow the rules in the code, you can make a complaint and if you’re not satisfied with the response or they don’t get back to you within eight weeks, you can make a complaint to the Financial Ombudsman Service.
Citizens Advice is currently running a survey on pay day lenders until the end of November 2013. Payday loan customers can provide their feedback by calling into Hackney CAB, 300 Mare Street E8 1HE.
