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Payday lender codes of practice 'may not protect people from their loan charges'

The new code of practice for payday lenders might not go far enough in protecting vulnerable members of the public from high loan charges, Consumer Focus has claimed.

Director of financial services at the organisation Sarah Brooks stated while the new requirements should enhance the experience of people using this funding option by providing them with clear details about the loan claim, "many of our concerns still remain".

She pointed out the codes are "silent on key issues", such as whether the approval process will require a credit check or if continuous payment authorities can be misused to repeatedly attempt to take cash out of a bank account.

The expert asked: "Will affordability checks be robust enough to ensure that companies are lending responsibly?"

Furthermore, she questioned whether or not there will be fair processes set up to assist people who fall into financial hardship after making payday loan claims.

Her statements follow news that trade organisations representing more than 90 per cent of the short-term loan and payday lending sector have published a revised codes of practice.

Amir Hussain
Amir specialises in personal loans, consumer debt and debt management.ADNFCR-2776-ID-801416692-ADNFCR

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