According to the adverts, some current financial options are the saviours for borrowers.
Though a string of expose’s on ‘dodgy’ practices and exceptionally high interest rates has seen many areas of the UK finance industry exposed for what they really are, a hoax and money making machine for unscrupulous lenders whose only goal is maximum return from those least able to pay.
In this article we look as some of the bad practices so you can avoid falling victim of payday lenders who do not have your best interests at heart.
1. The major lender ‘unfair and misleading’
The Financial Conduct Authority took the view that Wonga was guilty of using “unfair and misleading debt collection practices” when it was proven that the lender had created fake law firms by using the names of some of their employees.
The financial regulator ruled that Wonga must compensate approximately 45,000 customers who received the letters, which threatened to pursue legal action over outstanding debts.
For more on the FCA visit the official FCA Website.
2. Which says payday lenders are “exploiting borrowers”
Another nail in the coffin of payday lenders’ reputations was hammered in by Which?
Their investigation resulted in the accusation that payday lenders in general “exploited” borrowers who defaulted on repayments by imposing over the top penalties which significantly increased the chances of the borrower finding themselves in a debt spiral.
Which? looked into the levels of the default fees charged by 17 lenders and found that Wonga, one of the highest profile payday lenders in the UK, charged the most with a £30 charge.
This fee was defended by Wonga who claimed the charge “reflected the extra cost of someone defaulting.”
Of the 17 lenders who were investigated, 10 imposed default fees of £20 or more, whilst 4 charged at least £25.
For more on this Which? investigation, please click on the following link –
Are Payday Lenders ‘Exploiting’ Borrowers?