Category Archives: Payday Loans

UK Payday Loan Lenders Offering Customers up To £1,000 for Referrals

UK Payday Loan Lenders Offering Customers up To £1,000 for Referrals

Payday loan companies like BrightHouse and Amigo Loans among many others are in the spotlight for offering their customers monetary incentives for recommendations. As the rules and regulations surrounding marketing payday loans tighten, some payday loan companies in the UK are resulting to using what many may consider to be unethical marketing practices.

The latest consumer watchdog reports show that some payday loan companies are offering their customers up to £1,000 if they successfully convince their friends and family members to take high-interest loans. Lenders such as BrightHouse are on the spot for offering £220 to customers who introduce their family members and friends successfully. Consumer watchdogs have termed this incentive ”cynical”. Amigo customers are earning up to £1,000 for making their friends and family members take out £10,000 loans which attract a 50% annual interest rate. BrightHouse which is a popular rent-to-own retailer is offering £220 to customers who convince their friends to take out loans attracting interest rates up to 99.9%.

There are many other lenders guilty of this seemingly unethical practice. Doorstep lender Provident is also paying its customers £30 for referral loans amounting to £100 or more at 535% interest. Loan At Home hasn’t been left behind. The lender is offering £20 or more to customers who promote loans attracting a 433% interest. What’s interesting is; the lenders see nothing wrong with their incentives. When contacted, Loan At Home claims they are happy to offer a ”small” reward to customers who promote them. BrightHouse claims its actions are common among retailers. Amigo is on record insisting their marketing strategy targets a small percentage of loans. Consumer watchdogs are of a contrary opinion. According to Marc Gander, a Consumer Action Group Administrator and Adviser, ”the schemes are bound to attract many people.” Martyn James from resolver.co.uk shares similar sentiments. James sees serious ethics concerns about the payday loan marketing schemes. His sentiments have been repeated by many other consumer watchdogs as well as individuals who are concerned about increasing debt levels in the UK. According to the latest Bank of England statistics, UK households have accumulated unsecured debt amounting to £204billion.

When should you take out a payday loan?

The recent developments have brought into question the circumstances that warrant taking a loan. Although unethical, these schemes may very well be legal exposing many vulnerable borrowers to debt problems. So, how should you protect yourself? The first most important step is understanding when you are supposed to take out a payday loan or any other loan. Never take a loan just because it is available. You need a better reason! For instance, payday loans should be taken by people who have emergency cash needs. If your car has broken down mid-month and you don’t have money for repairs, you can take out a payday loan. Payday loans can also cater for emergency medical expenses among other unexpected monthly expenses as you wait for your salary. If you don’t have any pressing emergency cash need, don’t take out a loan even if it is available to you instantly.

Short term loans spanning for a few months to one year should be taken for reasons such as starting a business. There is a general rule that states you should never use loans to acquire liabilities. A car is a liability if you don’t use it to earn you money. Clothes, shoes, electronics, and furniture are also liabilities in this regard because they don’t earn you any money and they lose value with time. It’s also important to take out loans from responsible lenders only. Responsible short term loan lenders in the UK don’t use unethical loan promotional techniques to lure innocent borrowers into debt. They care about their customers as much as they care about profits.

Reputable payday loan lenders in the UK are registered by the FCA. You can search the FCA’s register (https://register.fca.org.uk/) to ascertain the firm you are dealing with is authorised. Furthermore, authorised firms don’t charge exorbitant fees. It is worth noting the FCA has regulated payday loans tightly in the UK due to past incidences of borrower exploitation. The regulator is in the process of extending its reach to other types of loans. Before there is adequate regulation on all types of loans available in the UK, it is important for borrowers to seek loans for the right reasons and stick to borrowing from reputable lenders and brokers like SwiftMoney.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Consumer Finance Up 3% in September 2017

Consumer Finance Up 3% in September 2017

The latest on consumer finance in the UK According to the latest figures by the FLA (Finance & Leasing Association), consumer finance growth is up by 3 percent in September 2017 compared to the same period last year. Q3 2017 has seen a new business growth of 6% compared to Q3 2016.In September 2017, new business generated by credit cards and personal loans grew by 3% compared to September 2016. Online credit and retail store new business increased by 6% over the same period. Second charge mortgage value (new business) also grew at a similar pace in September 2017. However, new business volumes dropped by 2 percent over the same period.

According to Geraldine Kilkelly, Chief Economist and Head of Research at the FLA, new consumer credit is expected to increase by 3.3% in 2017, a significant drop from the 6.3% growth in 2016. This forecast comes in the wake of subdued consumer confidence and the slowest business growth since April. Consumer confidenceAccording to the most recent Lloyds Bank spending power report, consumer confidence is at the lowest level in 2.5 years (since April 2015). Consumer confidence is a measure of how consumers feel about their current as well as the future state of their finances and economic conditions as a whole.

In the IPSOS MORI monthly survey involving 2000+ UK bank account holders, 61% felt positive about their finances in October, a 3pp drop from 64% the previous month. Consumer confidence is a vital consumer finance metric. The measure is at its lowest level in 30 months. Statistics indicate that there is a huge gap between different age groups. Majority (78%) of individuals over 65 years old are positive about their financial situation compared to 60% of individuals between ages 18 and 24 years and 61% of individuals aged between ages 25 and 34 years. The latest statistics also show that women are less positive than men in regards to consumer confidence, i.e., 58% against 64%. Although we are approaching the festive season which is characterised by overly positive consumer finance metrics (increased borrowing and spending), 38% of individuals in the Ipsos MORI survey are worried about personal spending during Christmas. 13% of individuals in the survey are planning to cut back on typical spending to cater for festive spending.

The number of UK households with comfortable financial situations dropped in October 2017 by two percentage points to 60%. The situation is worse among households with children aged 18 and below. Lloyds Bank customer account data analysis shows that people are spending more on essentials. The latest statistics show a 2% growth in essential consumer spending in October. This represents a 17-month consecutive growth in essential spending with food accounting for approximately 40% of all essential spending.

Fuel spending is also significant according to the Lloyds Bank data analysis with an increase of approximately 5% which represents a 14-month continuous growth. Electricity and gas spending increased by 2.5% from 1% last month. Energy spending has been rising for the 3rd consecutive month after enjoying a continuous decline for three years. According to Robin Bulloch, Lloyds Bank Managing Director, although most people are positive about their finances, there was a significant drop in overall consumer confidence in September 2017. Bulloch attributes the drop to factors like inflation. Since inflation is at a 5-year high, Bulloch states that consumers, more so millennials, have begun to feel the pinch more than everyone else. He doesn’t find it surprising that the UK government reached out more to millennials in this week’s budget. As inflation rises and wages stagnate, UK consumers are being forced to rely on loans. This explains why there are more and more people taking out payday loans, credit cards and other forms of short term loans today. Consumer finance growth isn’t necessarily a good thing if consumer confidence remains low especially among the population that is supposed to drive the economy forward.

Although the budget has some interesting perks that will see minimum wage workers earn more and households save more in taxes, critics argue that the budget perks don’t mean much when you consider inflation. As the cost of essential increases, it is advisable to spend wisely during this festive season. You should stick to affordable goods during this season to avoid starting 2018 in debt. Avoid loans at all cost except for emergencies. Managing your finances is critical during this period since loans are easily accessible now more than ever before and we are approaching a time of the year characterized by overspending.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Shocking Number of Nurses Taking Out Payday Loans 2017

Shocking Number of Nurses Taking Out Payday Loans 2017

Payday loans for nursesMore than 1 in 20 NHS nurses are being forced to take payday loans to cater for everyday expenses. This is according to a new poll by the RCN. The recent Royal College of Nursing workforce poll revealed that 6% of nurses in the past year had been forced to rely on high-interest loans to meet daily expenses. 40% of the nurses questioned admitted to losing sleep over financial worries while 25% admitted to having borrowed money from their bank, family members or friends to meet regular monthly expenses.

What’s more is 23% admitted to having taken on another job just to cover typical bills/expenses. The survey which involved 7,720 nurses across the UK also showed that a record 50% of NHS nurses rely on overtime to meet their monthly bills. There’s more! 56% have been forced to make drastic financial decisions such as cutting back on travel and food expenses. 20% struggle to pay electricity and gas bills while 11% have been late meeting rental or mortgage payments at least once in the past year. Some nurses (2.3%) have also been forced to rely on food banks or charities to survive.

The RCN survey also indicated that 37% of nurses are seeking new employment opportunities which is a 24% rise compared to the same period a decade ago. What’s more interesting is majority of nurses looking for new jobs are searching for employment outside the NHS. 14% admitted to looking for employment opportunities abroad. The RCN survey shows that 70% of nurses feel worse off financially today than they were five years ago. The NHS employs 80% of the nurses in the survey. The current predicament is attributed to the NHS failure to meet its financial obligations as an employer. The RCN found it disturbing that the NHS is losing nurses because it is unable to pay wages promptly. Some nurses have gone as far as considering a total change in career.

Many nurses are ready to take on early retirement and find new jobs outside the industry. Some nurses are even discouraging new entrants in the industry despite being so passionate about nursing. The poll which was released before this week’s budget implored Philip Hammond to tackle issues surrounding public sector pay. According to Janet Davies, the RCN C.E.O and general secretary, these shocking findings show the amount of financial pressure faced by nursing staff in the UK today. Davies finds it ludicrous that the UK health service industry is losing highly-trained staff because the sector can’t be able to pay monthly bills on time. She goes further to state that the NHS may have managed to make savings, however; this has come at the expense of their staff.

The NHS is guilty of reducing remuneration for nurses every single year in real terms which explains why the health service sector has a shortage of 40,000 nurses currently in England alone. According to Janet Davis, the budget needed to give a clear way forward on wages for public servants. Hammond’s budget brings hope to UK workers including disgruntled nurses. In his budget reading on Wednesday 22nd November 2017, Hammond stated that the income inequality level in the UK is at its lowest in three decades. The poorest individuals have enjoyed faster income growth since 2010 compared to the richest . The percentage of full-time low-paying jobs has also decreased drastically.

According to Hammond, Britain’s conservative government is delivering a fairer country. Hammond has gone ahead and increased income tax personal allowance. The new limit (£11,850 per person) takes effect in April 2018. According to Hammond, this increase will mean typical basic rate taxpayers stand to save £1,075 yearly compared to 2010. Full-time workers who are on a national wage will enjoy an extra £3,800+ every year. The Chancellor has also increased higher rate tax threshold from £45,001 to £46,350 allowing people to earn much more before they are required to pay more tax. Most importantly, the Chancellor has raised the national living wage to £7.83 from £7.50. The raise which takes effect in April 2018 is expected to give full-time workers a £600 pay hike.

Many find Hammond’s budget a win-win for everyone although the wealthiest are expected to pay more income tax. Some critics, however, argue that the new budget doesn’t do much to help those in desperate need. According to critics, the budget incentives are mere inflation adjustments that don’t do much to solve the wage stagnation problem facing the UK in the past decade. As long as wages continue to fall behind the spiraling cost of living, nurses and many other workers in the UK will continue to depend on payday loans among other types of short term loans to get by. The average salary of a registered nurse in the UK stands at £23,319 according to the latest statistics. If the salary was to be adjusted in line with inflation, (by 14%, since the 2011 pay freeze), it should be £26,584 which is £3,265 more.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Global Trends in Financial Services Regulation

Global Trends in Financial Services Regulation

Financial sector regulators globally have been taking measures to protect financial services consumers. The FCA in the UK, for instance, has been spearheading financial services regulation in the lending sector to ensure borrowers are safe from unscrupulous lenders.

The FCA’s regulatory reforms started in the payday loan sector and are expected to shift focus to regular banks as the FCA looks to protect all borrowers from unnecessary charges.
While the UK financial services regulator is busy streamlining the financial services industry, countries like Canada among many others are following suit. So what are the global trends being experienced in financial service regulation?

According to the 2017 Global Regulatory Development & Impacts report, global financial services regulation is focusing on; enhancing transparency, imposing statutory best interest on advisors, banning embedded commissions and improving advisory proficiency. The report touches on financial services regulation implemented in 16 countries. There are many variations in the report in regards to the type of financial products under regulation.

The report reveals that there is a special emphasis on restrictions imposed on investment products in some jurisdictions while other jurisdictions focus on almost all financial products ranging from investment to insurance, deposit, and mortgage as well as other commission driven products. Different countries have also approached conflict of interest issues differently indicating differing market characteristics. Nevertheless, something is being done globally in regards to financial services regulation. Below is a summary of the major global trends.

1. Most countries favour enhanced disclosure

Most countries globally are in favour of financial industry players improving disclosure as part of the new financial policies and principles. Out of all the 16 countries reviewed in the Global Regulatory Development & Impacts report, the U.S. is the only country that hasn’t implemented enhanced disclosure initiatives. This trend focuses on ensuring financial industry players offer their customers as much detailed information as possible on fees and commissions to boost transparency.

2. Most countries are in favour of banning embedded commissions although few have taken action

The report also indicates that most countries have reviewed options to ban embedded commissions. This move has been spearheaded by securities regulators in many jurisdictions however, only the U.K., Australia, the Netherlands and South Africa have proceeded to ban embedded commissions. This represents just 13% of the $39.4 trillion global mutual fund assets market. In most of the markets that have implemented the ban, the decision was triggered by local circumstances. In the U.K. for instance, the ban was triggered by scandals in the financial industry. In Australia, the ban was triggered in reaction to the collapse of three main financial industry firms.

In seven countries namely; Germany, Hong Kong, Ireland, Sweden, Denmark, Singapore and New Zealand, the governments as well as securities regulators have ruled out banning embedded commissions entirely but promised to take some action.
Europe, on the other hand, has proposed to restrict independent advisors from receiving commissions. Some analysts, however, claim that these efforts aren’t enough since the independent advice channel is the smallest in the EU funds industry representing 11% of the total assets. Most fund sales in the EU are done via banks where the restrictions don’t apply.

3. Few countries have a best interest standard

Although most countries have expressed interest in creating a fiduciary/best interest standard, Australia happens to be the only country with a broad statutory best interest standard in place for advisors in the retail funds’ industry. The U.S. has made some steps in the right direction as well by adopting a rule which makes the definition of fiduciary more extensive under the employment retirement income security law. This change makes investment advisers offering retirement advice as well as insurance agents and broker-dealers subject to a fiduciary standard. The rule was supposed to come into full effect on 9th June 2017.

Summary

There is a collective global effort to improve financial services regulation. Most countries are however in the formative stages of reform. The U.K. led the way with the FCA by introducing tough regulation against unscrupulous payday loan lenders to protect the huge population dependent on payday loans. The U.K. must do more in regards to regulating other financial industry players.

But let’s not forget most countries including Britain only started making financial services regulatory changes recently. It will take time before the success of ongoing and already established changes is evaluated conclusively globally. In the UK however, the FAMR (Financial Advice Market Review) has already seen major improvements in the financial advice industry. The U.K. now boasts of offering better quality financial advice. However, accessibility is still an issue. There is a need to do more, faster, in the U.K. and the world at large although the world is on the right path in regards to financial services regulation.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

The Fastest Way to Pay up Short Term Loans

The Fastest Way to Pay up Short Term Loans

Living in debt can be very stressful. You have to make sacrifices to meet your debt obligations or face serious consequences like getting a bad credit rating, losing an asset, taking up more debt, etc. It gets worse when you live in a country like the UK where the standard of living keeps rising yet wages have stagnated forcing most people into debt. The current debt situation in the UK is alarming given the fact that the number of insolvent individuals (young people between 18 and 34 years) has increased drastically by 31% over the past year alone according to the Insolvency Service. Debt is apparently a problem so how do you get out of debt, especially short-term debt?

It doesn’t matter if you have payday loan debt or credit card debt. The tips/steps discussed below should work for all (if not most) types of short-term debt.

1. List all your debt

Debt repayment becomes a problem when you have more than one loan so, start by listing all the short-term debt you have from the largest to the smallest. It may seem obvious, but most people can’t tell you how many short term loans they service every month. This is understandable considering you can take multiple credit cards today, a payday loan, overdraft, small personal loan all at the same time. To ensure you don’t leave anything out, look for your monthly income statements and follow all deductions to ensure you don’t miss anything. The listing should include all important information, i.e., loan amount, interest amount, etc.

2. Identify the most expensive debt

After listing all your debt, you will be able to identify the most expensive debt. You should prioritise repayment from the most to the least expensive. Most people do the opposite for psychological reasons, but this shouldn’t be the case. The cost of the debt should be your utmost concern if you want to repay the debt fast and effectively.

3. Pay more than minimum

Once you have a clear picture of the debt you have, it’s time to start making repayments. To repay your debt in the fastest way possible, you must make sacrifices and pay more than the minimum payments every month. Besides repaying your debt in the shortest time possible, you will also save money on interest repayments. However, find out if you are liable to any prepayment penalties or charges before you get started. Some lenders discourage early repayment, so it’s important to find out where each lender stands.

4. Consider stopping your monthly savings/investment

To pay more than minimum every month, you need more money. For short term debt, it may not be practical to make lifestyle changes. Furthermore, these changes may not have a significant impact. You can stop your monthly savings/investment every month and channel this money to debt repayment. This option is great because it is easily accessible and doesn’t attract penalties. Furthermore, there is no need to continue saving when you have expensive short-term debt. Savings should resume after you have cleared such debt.

5. Consolidate

If you have a substantial amount of expensive debt that can’t be covered effectively by your monthly savings, you can consider options like debt consolidation. This option allows you to merge all your debt into one debt making it more manageable and cheaper. There are however shortfalls to consolidating debt. For instance, you need to be very disciplined since this debt repayment method works only when you meet your repayment obligations to the letter. It may also be a bit expensive when paying up debt in a short time.

NB: Although the above information is bound to help you clear your short-term debt in the fastest and most cost-effective way, it is worth noting that there are exceptions. For instance, it might not be prudent to settle the most expensive debt first because of penalties that may be charged for early repayment. Furthermore, you need to decide what is more important to you, i.e., settling the debt in the fastest way possible or settling all your debt regardless of how long it takes.

Lastly, you need to make some critical financial decisions going forward to avoid finding yourself in the same situation. For instance, you need to prepare and stick to your budget and avoid spending habits that cause you to borrow excessively. You should also seek professional help if you feel you can’t make significant progress on your own.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

FCA Warning: Are Young People In The UK Borrowing Too Much?

FCA Warning: Are Young People In The UK Borrowing Too Much?

In a recent ”Money Matters” interview with BBC, the C.E.O. of the FCA, Andrew Bailey expressed concerns about growing debt among young people aged between 18 and 34 years in the UK. His concerns came as the number of insolvent individuals in the 18 to 34 age bracket increased by 31% between years 2015 and 2016, according to the Insolvency Service.

The latest Insolvency Service statistics show that seaside towns in Wales and England have the worst debt levels among the youth in the UK. The towns that are worst hit include; Scarborough, Torbay, and the Isle of Wight.

The FCA is currently focusing on sustainable, affordable credit, i.e., reducing high-cost payday loans and long-term credit card debt. In his interview, Bailey warned that there is an increasing number of young UK citizens taking out credit cards and payday loans among other short-term credit loans to cater for basic living expenses.

Although Bailey goes ahead to state that the current debt levels haven’t reached a critical level from a macroeconomic standpoint, there are serious concerns about why debt levels are increasing among young people. Bailey attributes this new disturbing trend to a generational shift in patterns of wealth and income. He doesn’t view this trend as reckless borrowing per se, but an indication of the current basic living standards.

Bailey feels basic living costs have increased drastically over the decades forcing the young generation to borrow more to meet essential living costs. He points out specifics like the high cost of rental houses as well as poor/lack of income growth as the main causes of the debt problem. Today’s youth also have lower asset ownership levels which is a different generational experience from decades ago.

Bailey also attributes the current debt levels among the youth to an increase in ”unsecured lending” ranging from credit cards and overdrafts to car loan and personal loans. According to the latest Bank of England statistics, consumer debt now stands at over £200 billion and increasing drastically at 10% every year. Savings are also decreasing due to low interest rates and higher cost of living.

Other sentiments

According to Vince Cable, the Liberal Democrat Leader, the current debt problem among young people in the UK is attributed to the conservatives’ failure to implement their manifesto pledge on creating better laws for people facing financial difficulties. Cable claims the pledge to offer legal protection ranging from interest to charges and bailiffs for 6 weeks to individuals in distress because of debt will go a long way to solve the debt problem in the UK.

Jonathan Reynolds who is the Treasury’s shadow economic secretary finds a lot of human tragedy in the UK debt story. According to him, the youth don’t have a choice. Labour suggests there should be a cap on charges on other forms of short-term debt in line with the payday loan cap. According to Shadow Chancellor, John McDonnell, there is a need for special focus on credit card debt which has spiralled out of control. McDonnell has plans to help over 3 million people in the UK who are currently paying more than they should in interest payments.

Joanna Elson, the C.E.O. of Money Advice Trust agrees with Andrew Bailey’s sentiments. Elson states that although the current debt levels among the youth may not be severe to the economy, the trend has a critical effect on an individual level. Elson stresses the importance of debt advice but recognises the fact that very few young people are seeking financial advice when they find themselves in financial problems.

FCA intervention

The FCA is currently looking at some practices as well as forms of high-cost debt which are the main contributors to the UK debt problem. Although a lot has been done to regulate payday loans among other short-term loans in the recent past, the FCA boss would love to see increased focus on sustainable, affordable credit provision. The FCA has also turned its attention to the rent-to-own industry which charges high interest for ”white goods” like washing machines.

The FCA clampdown on payday loan lenders which started in 2015 brought sanity to a troubled industry. Payday loan charges are now capped. Borrowers don’t need to worry about affordability as long as they choose a reputable payday lender. Furthermore, there has been reduced over-dependence on payday loans according to Treasury select committee member, Kit Malthouse.

The next step is making the payday loan rules an industry standard. The FCA boss has stressed the importance of sustainable credit in society and offered assurances on maintaining a close eye on high-cost lending going forward.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

Data Protection Laws Set to Tighten in the UK

Data Protection Laws Set to Tighten in the UK

The British government has proposed a data protection bill meant to give the British people more power and control over how their personal data is used. The bill proposes a number of changes to the current data protection laws the most notable being; easier access to all data held by companies, increased ability to withdraw access as well as the ability to request data deletion.

The regulation which will bring GDPR (General Data Protection Regulation) into UK law is set to be in effect in less than a year according to Matt Hancock, the UK Digital Minister behind the proposed bill. Hancock states that the new data protection laws will offer the UK a more dynamic and robust set of data laws. In a statement issued by Hancock, ”UK citizens will have more control over how their data is used. The proposed data laws will also prepare UK citizens for Brexit.”

The new regulation has caused concern in organizations across the UK given the fines applicable are easier to issue and more damaging to companies which fail to comply. For instance, fines could amount to 4% of a company’s total global turnover which could easily lead to the downfall of many companies in the event of serve fines. Currently, data protection fines can’t exceed £500,000.

Data protection incidents

Data breaches in the UK have increased in the recent past. Hundreds of thousands of UK citizens have been left exposed by data breaches in the past. A notable example is the data breach that hit UK’s leading payday loan lender Wonga. The incident affected approximately 245,000 Wonga customers in the UK and 25,000 in Poland.

The Wonga data breach happened in March 2017. Wonga, however, waited until April 2017 to notify its clients after establishing the extent of the breach. The incident saw Wonga customer’s names, addresses, phone numbers, bank a/c and sort code numbers stolen. Wonga has suffered another data breach back in 2012/13. The identity theft incident saw Wonga customers lose £3 million after scammers made over 19,000 fraudulent payday loan applications.

UK telecom company TalkTalk has also been a victim of a data breach. In October 2015, TalkTalk systems were hacked compromising customer information belonging to 157,000 customers. The company was fined £400,000 which was far from substantial according to many people. The importance of better data protection laws can’t, therefore, be ignored. With the new laws, firms must be more vigilant in protecting customer’s data or face serious repercussions. Research from Veritas indicates that only 9% of companies in the UK have appropriate data protection practices in place today even with the ongoing regulatory changes.

Repercussions/effects

With the proposed data protection laws set to take effect in less than a year, it is important for organizations to take all the necessary steps in the right direction.

Information Technology

Organizations using cloud and automation technology already will find it easier to cope with the new data protection laws. When GDPR comes into effect, all organizations handling personal data belonging to UK citizens will have to comply. The first step towards compliance is getting the right IT systems in place. Safeguards must also be built into all processes from the beginning to the end.

Data migration

Organizations may also be forced to move data. According to Peter Godden, Vice President of EMEA at Zerto, businesses may be required to move critical data in/out of Britain to comply with the new regulations. Many companies stand to struggle to move critical data across various systems without experiencing problems like downtime. Good businesses continuity plans are crucial going forward for companies keen on avoiding data migration problems.

Data storage

The new data protection laws will also introduce data storage challenges. According to Matthew Bryars, CEO of Aeriandi, ”many companies have not considered the impact of GDPR on data storage processes such as storage of customer calls done to improve customer service. The new laws give customers an express right to demand for their personal call information/data to be erased. The laws are also more stringent on backup and storage of voice call data. Businesses must develop the capacity and ability to store and retrieve customer call data faster on request.”

Nexsan COO, Geoff Barrall also shares the same sentiments. According to him, ”CIO’s must evaluate their current IT infrastructure and create purpose-built secure data storage environments to be able to meet the new data protection laws. Barrall stresses the need for either cloud-based or on-site storage customer data storage solutions as long as they are flexible, agile and secure.”

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

The FCA Maintains the Payday Loan Price Cap in Place until 2020

The FCA Keeps the Payday Loan Price Cap in Place until 2020

On 31st July 2017, the FCA published the results of a review it had done on high-cost credit which included an assessment of the effectiveness of its recent payday loan price cap.

The review offers undisputed evidence that the FCA regulation on payday loan lending has worked in favour of consumers as intended given that approximately 760,000 payday loan borrowers in the UK are saving over £150m every year. The review also shows that payday loan firms are now seeing fewer borrowers and debt charities with debt problems arising from expensive short-term credit. For these reasons, the FCA has decided to leave the current payday loan regulation unchanged until 2020.

Other forms of high-cost short-term loans

Besides clearing concerns on payday loans, the review also addresses concerns on other high-cost credit such as overdrafts. According to the review, The FCA feels fundamental changes on overdrafts are necessary in the future. Fees charged on unarranged overdrafts remain high and complex.

Home-collected credit, Rent-to-own credit as well as catalogue credit sectors are also on the spot. Although high-cost products and markets have many similarities, there are significant differences on how these products and markets work as well as how borrowers use them. The FCA is in the process of making tailored solutions to address these issues and is set to give a way forward in spring 2018.

According to the C.E.O. of the FCA, Andrew Bailey, high-cost credit products are a key focus for the regulator given the risks they expose to vulnerable customers. Bailey is pleased with the current evidence showing a clear improvement in the payday loan market after a period where payday loan firms used unacceptable business models. Besides the obvious improvement, he feels there is more to be done in terms of identifying other areas where short-term credit consumers may be suffering. Bailey’s focus is now on the nature as well as the extent of problems surrounding unarranged overdrafts without touching on the positive that customers find useful.

Clarifications

Alongside the review are proposals published to clarify FCA rules on affordability and creditworthiness. Most lenders understand the regulator’s rules concerning checks on prospective borrower’s creditworthiness including the products they can afford, however, there are uncertainties in parts of the credit market. For this reason, the FCA is proposing to effect some changes to make its expectations clearer.

The regulator has also published additional details on its motor finance work highlighting the issues it is considering as well as the steps it will take to develop an understanding on the market. An update is expected to be issued in 2018 during the first quarter.

Industry reaction

The FCA review results and comments have been received well in the industry. According to Eric Leenders, Managing Director, ”UK Finance members are committed to responsible lending and serving better those clients who need access to credit regardless of the type of credit product they need.” Leenders affirms the importance of consumer credit in promoting economic growth when used sustainably and recognises the importance of lenders working hard to balance between helping customers and ensuring long-term affordability. Leenders also agrees that transparency is an important issue and UK Finance is doing everything necessary to make overdraft fees clearer. Leenders also stresses the fact that UK Finance members are open to help customers struggling with repayments and welcomes efforts by the FCA to work closely with lenders.

Stephen Sklaroff, Director General of the FLA (Finance and Leasing Association) is of the same opinion. According to Sklaroff, ”the FLA is working tirelessly to make sure its members lend responsibly as well as treat customers fairly. We are aware that the FCA has found that most lenders are addressing affordability appropriately and we look forward to engaging the FCA on affordability assessments as the regulator does more exploratory work in motor markets.”

Gillian Guy, Citizens Advice C.E.O. attests to the fact that the payday loan price cap has protected many borrowers from unmanageable debt. According to Guy, ”many people were subject to extortionate charges trapping them into debt. Since the price cap among other new measures, fewer people are seeking our help.” Guy, however, states that things have improved for payday loans only. ”Other high-cost loans such as guarantor loans, doorstep loans, rent-to-own services and overdrafts are experiencing problems. It’s good to see the regulator recognise this and take the necessary action. We think a similar price cap will help safeguard consumers of these other forms of high-cost credit.”

 

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.