The Financial Ombudsman recently released figures that show a huge rise in the number of complaints about payday lenders over the last 12 months. Nearly twice as many consumers complained about these short term loans last year than the year before, suggesting that new rules introduced by the regulator recently before don’t seem to be filtering through to any greater level of consumer satisfaction.
This is especially true when you look into detail of the complaints received. Most still relate to the fact that lenders are failing to carry out affordability checks before giving people money, and that this means that money is being made available to people who are ill-equipped to make regular repayments. This leads to borrowers getting into arrears and one of the other issues that came out in the Ombudsman’s report is that lenders still seem unwilling to agree repayment plans with borrowers who get into difficulty.
But one of the biggest issues, and one that should have been resolved a long time ago, is that of continuous payment authorities, which are still used by many payday lenders. There is still a lot of unease about the fact that lenders are using this payment method that allows them to take cash out of borrowers’ accounts almost at will. The law changed a while ago giving consumers the right to cancel these payments where previously it had to be the lender who did this but it seems that many lenders haven’t fully taken this on board yet.
You should make sure that any instruction you give a lender to cancel one of these authorities is acted on, and in fact you are entitled to a refund of any payments or charges taken from your account after the date that you cancelled the authority. If you have a problem with one of these continuing payment authorities that you want to cancel then the regulator’s website at www.fca.org.uk can help. It is generally easier to control payments set up on your account if you use a direct debit so you should ask your lender if it is possible to do this instead.