The payday loan industry has been in the news again and again over the last couple of years. It’s been a hot topic in newspapers, documentaries have been made about it on television and questions have been raised in parliament. The Financial Conduct Authority has taken over from the Office of Fair Trading with regards to short term loans and has promised to clean things up. But has all of this had any effect?
While it may not be obvious at first glance, it’s actually had a huge effect and will continue to do so. Part of the reason it may not be obvious is that relatively few companies actually get into the news. Companies like Wonga, Payday UK and the Moneyshop have had their fair share of headlines (and, obviously, with Cash Lady, we’ve had our fair share of headlines as well).
The most obvious aspect that has changed has been that companies have had to make sure that they provide more clarity with regards to what is put on the website, especially with regards to elements that are encouraging people to take out loans. Warnings have become standard on websites, which make clear what some of the consequences are if you do not repay on time, as well as showing where you can get extra information.
However, a lot of what goes on with the payday loan industry isn’t always as visible as the select companies with name value. There have been many, many payday loan companies, including lenders, brokers and affiliates. A number of these have either had their licenses taken away by the FCA or have decided not to continue in business under the new regulations. This is good news for customers, as these were generally the less reputable companies.
Another important point is that companies are having to be more clear as to what kind of company they actually are. Here at Cash Lady, for example, we’re a non-charging broker, which is something we’ve never hidden or tried to pretend differently about.
With regards to paid adverts (the adverts you see on the top and side of results on search engines like Google and Bing), there have been changes there as well, although these have actually been in place for some time. This means that when someone clicks on an advert, the page they go to must have clear explanations of the consequences of not repaying on time.
Also, and this is the least visible aspect, a lot of lenders are being more careful with regards to which affiliates and brokers they’ll work with. This means that there are fewer dodgy websites when you search for payday loans or for lenders. Because the FCA is pushing the lenders to take more responsibility with regards to where their customers come from (although many were already being careful), it’s led to a more careful approach across the industry and lenders are less likely to work with affiliates that don’t play fair by the customer.
Things are still improving, but from within the industry, the changes that are taking place are clear and widespread. So, we’d say that yes – things are definitely fairer for customers now.