The payday loan industry is failing to live up to its own promises to clean up its practices, according to the Citizens Advice.
Results from the charity’s payday loan tracker survey of more than 5,000 borrowers show just one in five customers struggling to repay their loan had the interest frozen, while just a quarter feel their lender treated them sympathetically.
Around 20 per cent of payday loan customers are not told about the financial risks of extending their loan, the survey found.
Separate analysis of Citizens Advice clients with serious debt problems showed that one in eight has an outstanding payday loan, with the average payday debt totalling £1,000, often spread across several loans.
Tomorrow marks the end of a ‘grace’ period given to payday lenders and consumer credit providers to allow them to adapt to the new regulations brought in by the FCA in April this year, with some lenders already having ceased trading due to the new rules.
Citizens Advice chief executive Gillian Guy says: “Payday lenders are still not sticking to their word to treat people fairly. While things are moving in the right direction, some payday lenders are still falling far short of responsible lending. Customers need to have the full facts at their fingertips when making decisions about borrowing.
“The FCA needs to use enforcement action to make sure firms flouting the rules are not allowed to operate. As people continue to make ends meet, the demand for short-term credit won’t go away.”