The OFT's own report highlighted that many people who use these loans have limited financial awareness about their financial options and what to do when things go wrong. We'd like to see an improvement in the future.
Cardiff, UK (PRWEB) September 7, 2010
In response to the new findings from Consumer Focus revealing a fourfold increase in the amount of people taking out payday loans over the last four years, Confused.com has added its support to calls for increased clarity and better regulation of this market.
Following the OFT report into high cost credit, made public in June 2010, the comparison site revealed details of its own investigation into high cost credit. In a review of payday loan provider websites, Confused.com found:
- Fees and charges associated with rolling payday loans beyond the initially agreed period were not clearly displayed;
- Insufficient advice on what would happen if the terms of repayment could not be met, in contravention of OFT responsible lending guidelines;
- One case where a Confused.com researcher was refused information on deferral charges until he had signed up with an account from the provider, effectively meaning he would be entering the agreement blind.
Confused.com's findings match those from Consumer Focus's new report 'keeping the plates spinning', in which interviewees identified that lenders could be more upfront about explaining the scale of the repayments if they didn't repay the full amount on time, and suggested that lenders needed to clearly explain what would happen if they were unable to repay their loan on an agreed date.
Commenting on the latest findings from Consumer Focus, Confused.com editor Sharon Flaherty said:
"As Consumer Focus points out, the issue with payday loans is not that they should be banned altogether, but that they should be reformed to ensure customers understand exactly what they are agreeing to, and what the charges will be if their circumstances change and they can't meet repayments. Increased transparency is crucial.
"Confused.com has had concerns about how some payday loan companies have been operating for some time, and has voiced these concerns to the OFT. We have even been contacted by customers who have taken these types of loans and have been treated poorly by lenders when they've had repayment difficulties. We agree with Consumer Focus that an industry code of practice is a good idea and that there needs to be better promotion of lower cost alternatives, such as credit unions, as previously highlighted by Confused.com."
Believing that there are many more examples of customers who have faced problems when dealing with these companies, Confused.com is asking people to share their experiences, in order to gather a collection of accounts for presentation to the OFT.
Sharon continued: "The OFT's own report highlighted that many people who use these loans have limited financial awareness about their financial options and what to do when things go wrong. We'd like to see an improvement in the future."
Customers who have suffered at the hands of payday loans companies and who would like to share their experiences with confused.com should email email@example.com or tweet them to @confused_com.
For further information please contact:
Press Office, Confused.com 02920 434 398
Confused.com is one of the UK's biggest and most popular price comparison services. Launched in 2002, it generates over one million quotes per month. It has expanded its range of comparison products over the last couple of years to include home insurance, travel insurance, pet insurance, van and car insurance, motorbike insurance, breakdown cover and energy, as well as financial services products including credit cards, loans, mortgages and life insurance.
Confused.com is not a supplier, insurance company or broker. It provides a free, objective and unbiased comparison service. By using cutting-edge technology, it has developed a series of intelligent web-based solutions that evaluate a number of risk factors to help customers with their decision-making, subsequently finding them great deals on a wide-range of insurance products, financial services, utilities and more. Confused.com's service is based on the most up-to-date information provided by UK suppliers and industry regulators.
Confused.com is owned by the Admiral Group plc. Admiral listed on the London Stock Exchange in September 2004. Confused.com is regulated by the FSA.
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