The Financial Conduct Authority has just announced a new report to be released next year that will address and outline any actions to be taken against all high cost alternative lenders. A simple online search for 'loans' results in an explosion of lenders willing to lend you money. Those particularly vulnerable are consumers unable to borrow money from traditional banking sources. From high cost products to reviewing the payday loan cap introduced in 2015, the FCA will look at further intervention needed in this sector.
FCA action against lenders
In the main the report will look into overdraft fees lenders charge and whether those costs are justified from a Consumer protection and competition point of view. The payday loan industry is still reeling from changes imposed in 2015 capping fees and charges on customers, which sometimes resulted in the final loan amount to the borrower being double the original loan.
Since the success of the payday loan cap the Financial Conduct Authority is now also turning its head towards overdraft fees alongside other alternative loan lenders in the field such as guarantor and logbook loans. Chief executive Andrew Bailey of the FCA has already stated that they are ready to take action against all non-compliance across all lenders in the financial market.
The Financial reply
Welcoming the FCA report, Michael Sands chief Finance officer at logbook lender elogbookloan, states that until banks rethink their policies towards people with a less than perfect credit score, then people will always turn to alternative lending. An issue that the mainstream traditional financial industry does not like to acknowledge and even less so, address.
From a broader view into the market, Google at a great financial cost to itself, has already banned payday lenders from advertising on its search engine, resulting in far better search results and less spam websites taking over its search engine. With online advertising and marketing being the main consumer introduction to alternative lending, will Google continue to police this industry?
With many consumers and debt charities seeing overdraft fees as another form of debt, the Financial Conduct Authority report could not come soon enough.
