After much discussion in parliament and a high-profile, industry-wide clampdown by the FCA, confidence in the services offered by payday lenders appears to be at an all-time high.
The Citizens Advice Bureau, an independent UK charity which provides free legal advice to individuals regarding financial and consumer problems, recently reported that the number of reported complaints regarding direct payday lenders had plummeted to less than half that of the previous quarter – just 5,554 in January - March 2015, compared with 10,155 during winter 2014.
The decline in complaints has been attributed to the fact that the overall cost of payday loans and text loans was capped at the beginning of the year. This means that consumers who simply cannot afford to make repayments on their debt in time will no longer be required to pay back more in imposed charges than the initial sum they borrowed.
The Office of Fair Trading, which was the predecessor to the FCA, had previously raised concerns that some consumers who were unable to make repayments on time faced additional fees as debts were “rolled over” to the following month.
Since the beginning of the year, payday lenders have changed their practices regarding loan rollovers, and lenders are only permitted to make two unsuccessful attempts to retrieve payments from a borrower's bank account.
A spokesperson for the Citizens Advice Bureau praised industry figureheads for their cooperation and maintained that ethical lending combined with a “watchful eye” over practices ensured that ultimately, consumers were getting the best deal. The decline in complaints also demonstrates how lenders are committed to providing responsible financial services.
This renewed confidence in payday lenders means that consumers now no longer see firms as a “necessary evil” – in fact, figures suggest that four out of five people who avail of the services of a payday lender are likely to take out another loan within the next 12 months. Increased consumer confidence combined with a healthier economy means that the state of borrowing has rarely been healthier.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk