To Better Regulate High Cost Lending
We would urgently ask for support to the on line petition which calls for the Financial Conduct Authority to regulate the High Cost Lending sector.
This petition which has today been launched by some of Britain’s biggest debt, consumer and anti-poverty organisations – including Which?, Citizens Advice, Stepchange Debt Charity, Church Action on Poverty and Centre for Responsible Credit, urges changes in the manner high cost lenders can operate. The impact of which is severely damaging to individual and household finances, and with many lower and middle income households now trapped in a debt spiral, inflated by high interest and a range of fees, which were not always made clear at the outset.
Self regulation is now clearly understood not to have been successful, and from April 2014 the FCA will regulate this sector.
Consistent breaches of the code of conduct introduced, despite warnings from OFT, show the need for effective regulation, to be enforced by the new regulators which protect consumers from poor practices currently operating to the benefit of some High Cost Lenders.
An e-petition has been launched on the campaign website Change.Org and we ask for everyone to support this call for tougher regulation of payday lenders.
The Charter has these main requests of the new regulators
Stop them giving loans to people who can’t realistically afford to pay them back
Stop them repeatedly rolling over loans and creating spiralling debt
Stop hidden or excessive charges
Stop them raiding borrowers’ bank accounts without their knowledge and leaving them in hardship
Stop irresponsible advertising and instead provide clear and transparent information
Require lenders to promote free and independent debt advice, and ensure they co-operate with other services to help people get out of debt
We also want action to support the growth of credit unions and other forms of more responsible lending; we want banks to increase the availability of credit to people on low and middle incomes: and we want new research on capping the total cost of credit undertaken now.
In asking for your support, I would add that Citysave is committed to providing ethical, responsible and fair priced loans, and has been petitioning all regulators for 4 years with specific cases we have seen of irresponsible and misleading lending, which appears designed to trap the customer in a situation that has all the benefit to the lending company.
We have amended products to now include a Fair Terms Payday Loan, and we have committed to competing with high cost lenders as far as we can. This includes currently promoting a scheme to help people escape their high cost lending. We are also forming partnerships and working with many organisations, seeking to offer services in communities which do not have access to affordable lending, where bank branches have been closed for example www.citysave.org.uk
However, the prolific growth in high cost lending sector seen in Birmingham is fuelled by the profits being reaped, and we cannot hold back the tide. Even joining together with other not for profit lenders through Birmingham Fair Money (www.birminghamfairmoney.org.uk) supported by the Council, we see that the only way we can really change the situation is through better, enforced regulation.
We are gathering the evidence of those who have been impacted by high cost lending who are willing to share their experience, and shall provide a full and detailed report to the FCA of all of these cases.
We have an opportunity to make sure that this time the regulation is effective in curbing the elements that cause most harm.
We sincerely thank you for supporting this on line petition and for helping the fight for change. Please forward this request to all those you feel may wish to add their voice.