On October 15, the FCA sent a Dear CEO letter entitled Affordability of High Cost Short Term (HCST) loans to payday lenders. This letter tells the lenders to review their affordability assessments. There are some very clear points about what the FCA expects a payday lender to do if it is not making good affordability assessments now or hasn't done in the past. "Chains of loans" over an … [Read more...]
Debt news and policy
Debt Camel articles on what's changing - and what ought to change - in the world of personal debt in Britain.
If you are interested in a specific area, look at: High cost credit news & policy and Insolvency news & policy.
2018 – Ombudsman decides it can look at payday loans over 6 years old
The Financial Ombudsman (FOS) has published in September 2018 two Decisions involving payday loans over six years old: Mr H has complained about fifty-four payday loans Lender C lent to him between March 2010 and September 2014. Mrs W’s complaint is about nine short-term loans from Lender D between November 2009 and July 2012. In both cases FOS has decided that its rules do allow it to … [Read more...]
IP regulation – Insolvency Service find major problems
The Review of the monitoring and regulation of insolvency practitioners that was published by the Insolvency Service last week found evidence of many of the problems in Individual Voluntary Agreements (IVAs) that I and other free-sector debt advisers have been talking about for several years. Although it is often not specific about what has to be done, the report is clear that change has to … [Read more...]
Lessons to be learned from Wonga – 6 policy challenges
It's now a few weeks since Wonga went into administration. This seems like a good point to ask some difficult questions about the lessons from Wonga and what should be done to reduce consumer harm in future. Much of the media coverage has gone as follows: Wonga was the worst - then the FCA fined them and made them write off debts in 2014 and introduced good payday loan regulation in 2015. … [Read more...]
Adding Liability Orders to credit records – a bad idea!
County Court Judgments (CCJs) are added to people's credit records, so why shouldn't the same be done for Liability Orders (LOs) for council tax arrears? This is a really bad idea, involving major problems and costs for local authorities and magistrates courts. These would massively outweigh the potential benefits. Magistrates Court Liability Order processes are not comparable to County Court … [Read more...]
Introducing a cap on the cost of Rent To Own lenders such as Brighthouse
The FCA's Consultation on High Cost Credit 18/12 is clear about the harm caused by Brighthouse and other rent-to-own (RTO) lenders: Our findings make clear that the costs of RTO are high, sometimes exceptionally so. RTO users are paying an average premium of 3 or 4 times the typical retail price of goods. At the extreme, this can be nearly 5 or 6 times ... We think it is highly likely that harm … [Read more...]
Vanquis ROP – over limit charges not included in the refunds
I have asked Vanquis how they are calculating the FCA-ordered refund of the interest that people have paid because of their ROP purchases. One thing that Vanquis have explained is that they are not including a refund of any additional over the limit charges. This won't affect everyone getting a refund but it will be important for some people. Why aren't Vanquis refunding these? Vanquis … [Read more...]
Vanquis ROP refunds – they look too low – what is happening?
People are starting to get refunds from Vanquis for the extra interest they paid if they had the Repayment Option Plan (ROP). That's the good news. But the refunds are being paid very slowly. In June, Vanquis gave up its three-month target and said it hoped to refund people with open accounts by the end of the summer. UPDATE That didn't go well. In October people were then being told … [Read more...]
FCA high cost credit review – great headlines, not so much action
The FCA published two High Cost Credit Review consultation papers published yesterday: rent-to-own, home-collected credit, catalogue credit and store cards, and alternatives to high-cost credit; overdrafts. Although these got some great headlines - the word crackdown appeared frequently - I think it is fair to say that most debt policy campaigners have been disappointed by the proposals … [Read more...]
Max FOBT stake to be £2 and other good news about gambling
Today's announcement that the Government is restricting the maximum stake on FOBTs to £2 is brilliant news. At the same time, the government has announced a range of other measures, some to come in now and some that may be introduced in the future. And yesterday Monzo talked about what is going to be doing to help its customers self-exclude from gambling. Restricting FOBT stakes to … [Read more...]
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