Tag Archives: payday loan

Why Are People Being Denied Payday Loans?

Getting a payday loan isn’t automatic. Although choosing a payday lender with a high approval rate helps, your loan can still be declined. Why?

Changing business models

Before the FCA introduced a price cap on the total cost of payday loans, more than 50% of lenders profited greatly from late payment as well as default charges. The FCA was determined to change this by limiting rollovers, default fees and CPA attempts. These changes made unaffordable lending less profitable eliminating lenders who based their business on people who couldn’t afford repaying their loans.

Before the FCA cap, a payday loan of £200 could cost a borrower as much as £800 or more. After the price cap, the total cost of the charges were capped at 100% meaning a £200 loan can never cost more than £400 in total regardless of the amount of time a borrower takes to repay. As a result, the cap forced lenders to change their business models by tightening their criteria for lending which includes declining high-risk borrowers who they would have accepted previously before the cap.

The changing business models are evident according to the FCA given recent statistics indicate that lenders are only getting 20 to 25% of their revenues from borrowers who have problems making repayments. This represents a 50% deduction before the FCA cap. It is therefore evident that payday lenders have changed their lending models and are focusing on low-risk borrowers.

Borrower profile

To get into more detail on why certain borrowers are denied payday loans, it’s important to look at different borrower profiles. Being denied a payday loan can be demoralising considering one applies for such a loan when you are in need of emergency cash. If one lender denies you a loan, it’s not advisable to try another lender but rather understand the reasons why your loan application has been declined.

Below are 3 main reasons why payday loan applications are rejected.

1. Affordability

The current regulations require lenders to carry out affordability checks before approving any loan applications. The checks are done by assessing the applicants income vs. expenses to see if they are left with some money to meet loan repayments. If your loan has been declined because of affordability, you can focus on spending less or earning more. It isn’t recommendable to lie about your income and expenses just to secure a loan. Instead, find ways of making more money and reducing your expenditure. You can get a part-time job and cut on unnecessary expenses like restaurant meals.

2. Credit history

Although payday loan brokers like SwiftMoney can’t deny you a loan because of your credit history, most lenders factor in a borrower’s credit history before deciding whether they will give the borrower a loan or not. Most lenders may not tell you this, but it happens in most cases. High-risk borrowers tend to have a bad credit score. If that’s the case with you, there are measures you can take to improve your credit score and boost your chances of securing a loan in the process. Start by checking if there are any errors that may have damaged your score unfairly. You should also start paying your bills on time as this boosts your score over time.

3. Over-applying for loans

Payday loan lenders also tend to shy away from borrowers who apply for loans too much. Instead of submitting a loan application to every single lender you can find, take your time and make sure you met the lending criteria before you apply. Over-applying for loans won’t help if you don’t meet the eligibility criteria. Furthermore, over-relying on loans can make lenders raise your risk profile. It is actually better to focus on not needing short term loans in the first place through efforts like saving.

Conclusion

Payday lenders are declining more loan application now, more than ever. This is precisely what the regulator hoped for. The cap on cost has made it undesirable to target borrowers who have problems meeting their repayment obligations. Payday loan companies have adopted a new business model focused on low-risk borrowers. High-risk applicants have a harder time securing short term loans today. However, they can focus on passing affordability checks by increasing their income and reducing their expenses. Improving credit scores and applying when they meet the eligibility criteria given by lenders will also help increase chances of qualifying for a payday loan.

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.

Wonga on the Spot Again For the Wrong Reasons

Wonga is in the headlines again for the wrong reasons. Regulators and claims management firms have ganged up against the payday lender, a move which if successful could see the firm wind down. This has happened just when things seemed to get better for Wonga.

It has emerged that the lender’s investors had to part with a £10m rescue package dubbed capital injection just recently. The emergency fundraising happens just 6 years after Wonga was set for a flotation which valued the lender at more than £770m ($1bn). Today, the lender is worth a mere $30m.

Wonga launched in July 2008 with the promise of offering instant-decision short term loans to online borrowers. The lender grew exponentially aided by private equity investors to become a dominant player in the online short-term lending industry. Wonga defended its high annual interest rates amounting to over 5,000% by claiming it offered loans for days/weeks, not for a year.

Wonga downfall

Wonga’s downfall began when stories started emerging of vulnerable borrowers struggling to repay their loans. These stories marked the onset of political pressure. Although Wonga claimed its clientele was composed of web-savvy individuals who didn’t like using traditional banks, the Guardian found some conflicting evidence suggesting Wonga was serving hard-pressed borrowers who couldn’t access credit elsewhere.

In 2011, the lender issued 2.5 million loans and posted a massive £45.8m profit against revenues of £185m. This represented a 300% increase in profits from the previous year. In 2013, Wonga was hit by a regulatory clampdown when the Office for Fair Trading launched an exercise to start cleaning up the payday loans industry. The FCA followed suit with an interest rate cap putting an end to the exponential profits lenders like Wonga were making.

The co-founder and C.E.O. Errol Damelin quit in November 2013. His replacement, Andy Haste, a former chief executive of insurer RSA joined shortly after as the Chairman pledging to improve business practices which started a cycle of lower profits for Wonga.

Haste started by drafting a new management team led by Tara Kneafsey which didn’t perform as expected since Wonga’s profits decreased and “jumped into the red” in subsequent years. Wonga reported record losses in 2015 and 2016 (£80m and £66m respectively). This was despite the fact that the lender was hoping to return to profitability in 2017.

Recent Woes

Wonga has been faced with an unexpected increase in customer compensation claims relating to loans dating back to 2013. In 2013, the lender was forced to write off loans amounting to £220m and interest income for 330,000 customers.

Claims management firms targeting payday loans have triggered a new wave of complaints. According to the Financial Ombudsman, complaints about Wonga increased from 269 (in 2015) to 2,347 in the 2nd half of 2017. Back in April 2017, only 10% of payday lender claims were made via claims management companies. One year later, the figure has increased to 66%. The Financial Ombudsman has also extended the time for borrowers to file cases increasing pressure for Wonga to the extent of threatening the lender’s survival.

According to the managing director of Fairer Finance, James Daley, it isn’t surprising that Wonga is in the current position because they exploited a loosely regulated market. Daley states that Wonga was in the forefront of offering people fast access to credit but didn’t treat its customers fairly.

Claims management companies are targeting payday loan lenders as potential payment protection insurance payouts start to reduce. PPI customer have one year to launch complaints before the regulators (FCA’s) deadline. Daley claims that Wonga is reaping what they sowed in their earlier years stating they are handing back all the money they made unfairly.

The lender received emergency funds from Accel Partners, Balderton Capital and 83 North, investors who had backed the lender early on. Meanwhile, Damelin has become one of the leading technology startup investors in the UK with notable investments like Purple Bricks, an online estate agent.

According to industry campaigners, the UK payday industry has reformed significantly since regulators intervened; however, lenders under strain resulting from austerity measures are vulnerable now, more than ever.

According to Citizens Advice C.E.O. Gillian Guy, the number of payday related problems has decreased by 50% compared to the days before the payday loan interest and charges cap. This is a testament that regulation works according to Guy. Although many problems including Wonga’s current problems date back to 2014, people still go to Citizens Advice when they are faced with loan repayment problems since loan affordability is still an issue.

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.

Sham UK Payday Loan Companies Con Vulnerable Borrowers £3.5 m Yearly

UK watchdogs have launched an investigation involving over 200 lenders in an effort to nab a large network of fraudsters that has been targeting vulnerable borrowers in the UK.

One such borrower, Peter Elliot aged 75 was conned £200 as he tried to hunt for a £1000 loan to go for a Christmas trip.

According to a Sunday People investigation, bogus payday loan companies in the UK are targeting the elderly and vulnerable conning them approximately £3.5 Million a Year.

According to the probe, the conmen offer short-term loans to old and desperate people but demand upfront payment (to act as insurance) before issuing the loan. The cons simply pocket the upfront payment without issuing any loan leaving their victims hundreds of pounds poorer. They have concealed addresses hosted abroad and bearing details cloned from respectable institutions operating in the UK.

One popular scam involves asking unsuspecting victims to purchase iTunes vouchers and send the redemption code as insurance.

Peter Elliot was a victim of the iTunes Voucher scam. The scammers promised him a £1000 loan if he bought a £200 iTunes voucher as insurance for the loan. The crooks use the voucher codes to purchase goods or sell the codes online. Peter Elliot, a dad of six, was targeted as he was looking for a short-term loan to go and visit friends during Christmas.

He handed over iTunes vouchers worth over £200 but got nothing in return. The retiree from Mexborough, Doncaster couldn’t believe he had been scammed. The scammers were so friendly and charming he couldn’t believe they conned people. Elliot admitted to feeling stupid after he was conned and blames it on being vulnerable.

In April 2018, the FCA issued an alert on loan fraud stating unsuspecting borrowers were falling for fee scams amounting to £3.5million per year. The regulator claimed incidences of fraud had increased by 44% since 2016. In 2017 alone, there were more than 4,700 loan fee swindles reported to Action Fraud.

227 enquires have been launched to investigate fraudulent lenders since 2015. According to an Action Fraud spokesman, any person required to pay upfront fees to access loans or credit services is at risk of falling prey to loan fee fraudsters. Research shows that loan fee scammers target financially vulnerable individuals who are desperate to get loans.

Research also shows that most loan fee fraud victims are 38 and above with low incomes, low credit ratings and limited access to typical credit.

Action Fraud assesses all loan fee fraud reports received and in most cases, takes action against entities breaching the watchdog’s rules.

Precautions to take

According to Resolver.co.uk expert, Martyn James, scammers emerge everywhere when money is tight. According to Martyn James, it is easier to con a person who is desperate for money because they are willing to do more.

James advices borrowers to sick to FCA regulated firms since it is easy to launch a complaint via the financial ombudsman if the regulated firm you are dealing with fails to keep their end of the deal. It is crucial to note that there are some FCA-regulated financial services firms which ask for upfront fees (approximately £50) before offering credit broking facilities. So, not all firms which ask for upfront fees are fraudulent. It is up to a borrower to choose the firm they want to deal with although; it is advisable to avoid paying upfront fees.

In case you find yourself a victim of loan fee scams, you should act immediately. If you have transferred money via your bank, call your bank immediately and request for a recall of the funds. If you have already bought vouchers, contact the firm which supplies the voucher immediately and request that the code is suspended or cancelled and claim a refund. If the firm refuses to cancel the code, launch a complaint against the firm immediately.

Loan related fraud must be acted upon immediately if you wish to get a favourable outcome. Even if you have already been conned, the least you can do is launch a complaint. Notifying the relevant authority can save someone else from a similar fraudulent scheme. It can also help apprehend the fraudsters. It is not advisable to accept and move on although most victims of fraud don’t report to avoid embarrassment.

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.

Payday Loan Company ”Rapped” by Advertising Watchdog

Payday loan company Allay Claims Ltd which operates as CheckMyPaydayLoan.com was just recently reprimanded by the ASA (Advertising Standards Authority) for launching a radio advertisement that exaggerated the speed and ease of claiming with the company.

Allay Claims Ltd had previously contested the complaint, but the ASA declined their request and warned them against using the advertisement in its current form. The advertising watchdog upheld the complaint stating that the ad was indeed misleading.

The CheckMyPaydayLoan.com ad made repeated claims on how simple it was for customers to claim compensation after facing difficulties when making payday loan repayments. The ad stated that Check My Payday Loan offers claims which are hassle-free, with no obligation checks.

The ad went further to state that customers just need to have grounds for a case; the company will do the rest. Customers simply needed to text claims and let CheckMyPaydayLoan.com handle the matter. What’s more; the ad created a sense of urgency by including the words; ”what are you waiting for?”

Complaint

Advertising watchdog ASA received a complaint when a complainant discovered there were more requirements for launching a claim i.e., providing bank statements among other similar/supporting documentation.

In defense, CheckMyPaydayLoan.com’s broadcaster (acting on behalf of the lender) responded by stating that the additional information would be supplied to claimants after they sent a text. The broadcaster defended the ad by saying it clearly stated that a claimant must meet a specific criteria before their case was taken forward. The simple task of sending a text was meant to assess a claimant’s ground for launching a claim.

According to the adjudication, the ASA stated that most borrowers don’t know the process of launching claims for compensation against payday loan or short term loan lenders. The adjudication went further to state that it was accurate to conclude that people wouldn’t expect to do anything more after launching a claim via text given the ad’s wording. This decision was reached after considering CheckMyPaydayLoan.com’s defense of not stating the seemingly ”obvious”. According to the ASA, CheckMyPaydayLoan.com was found guilty of exaggerating the speed and ease of launching claims with them.

Main reasons behind the verdict

According to the ASA, the ad was deemed misleading because the process required claimants to offer more information than expected before a claim would be processed which was contrary to the ad claims of simply sending a text and letting CheckMyPaydayLoan.com handle the rest. According to the advertising watchdog, the ad didn’t create an accurate expectation of the entire claimant process i.e., on the need for more detailed examinations of bank statements and loan agreements of the claimant as well as a claimant’s correspondence with lenders.

Typical clams must follow a process requiring a claimant to offer more information. For a claim to be successful, a lender must also be found to have lent irresponsibly based on a claimant’s financial circumstances. Such a process requires a thorough examination of a claimant’s loan agreements, bank statements, and correspondence with their lender. The process can’t, therefore, be fast and easy according to the ASA which is why the watchdog declared the ad, misleading.

Recommendations

The ad can’t be broadcast in its original form again. According to the ASA, CheckMyPaydayLoan.com must make sure future ads don’t misleadingly exaggerate the speed and ease of processing claims with them.

In an effort to manage the situation, Allay Claims Ltd’s Director, Andie Stokoe, claimed that the radio ad was made by Capital and cleared to air by Radiocentre. He went on to state that Allay works extremely hard to ensure accurate communication between the company and its customers. In addition, Stokoe expressed his disappointment on the ASA ruling but promised to champion consumer rights address the concerns raised.

Lessons

As a payday loan borrower, the above case highlights the importance of borrowing from reputable payday loan companies which offer accurate

information. Although the best payday lenders offer fast and reliable services, they offer full disclosure on everything including; fees and procedures. You should avoid lenders that make offers which are too good to be true. Also, pay attention to the legitimacy of a lender before choosing them. All reputable payday loan companies have an FCA authorisation number. You should also consider online reviews. Reputable lenders offer exemplary services which attract numerous positive reviews.

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.

4-Must Have Insurance Policies For Your Family Besides Health Insurance

The main aim of insurance is to protect you against risks. There are insurance covers that can protect you from just about any risk you can imagine today. But given the nature of risks, i.e. there are too many risks, it is impossible to cover yourself against all of them.

This leads us to a very interesting question; which risks should you consider first?

Eventualities like sickness can unsettle your finances. Many people take emergency loans to cover unexpected medical bills not covered under the NHS. Short term loans like payday loans can cover a small medical bill. What happens when you or a family member has to undergo an expensive medical procedure?

We’ve gone through the trouble of selecting the most important insurance policies below. Here are the 4-must have insurance policies for your family besides health/medical insurance.

1. Life Insurance

Every family should have life insurance coverage for both parents/spouses. Life insurance is crucial for ensuring the family doesn’t suffer financially in case a breadwinner dies. Life insurance is crucial because it covers for funeral expenses, which can be very high. Life insurance also replaces the income of a spouse or parent for a long period allowing the family to go on with life as usual. You should have coverage amounting to at least a year’s salary. If you earn £50,000 for instance, you should have a £500,000 policy or more. The same applies for your spouse/partner. If your partner or spouse doesn’t work and you have children, it is still important to cover them because of their contribution to childcare among other chores which can take a huge portion of the family budget when they are gone. It is also a good idea to cover children as well if their demise will have a significant effect on the family’s finances. There are many types of life insurance covers for families in the UK covering all kinds of risks/expenses. Take your time an pick a cover that works well for your family.

2. Disability Insurance

This is another essential insurance policy for your family. Life insurance coverage should come first due to the devastating nature of eventualities like death. Disability is equally devastating. Even though a parent/partner may still be there, disability can render one jobless as well as drain the family’s budget in regards to healthcare costs. Disability insurance policies protect from loss of income among other related expenses arising. This type of cover may be more important than life insurance to some people since it can render a person jobless for life and introduce costly expenditures till death. Some people overlook disability covers because of the mere fact that they are healthy and disability looks farfetched. The most important thing to note is anyone can become disabled in an instance i.e. in case of a car accident.

3. Home Insurance

A home is a priceless family possession. As a parent, you don’t want your family to be rendered homeless by any eventuality whether it is natural and manmade. A fire can destroy your home. Your home can also be destroyed by harsh weather, an earthquake, etc. Homeowners insurance covers the cost of replacing the structure as well as contents. Homeowner covers can also cater for the cost of buying a new home in case your current one is destroyed completely. Other related costs included in homeowner covers include the cost of living elsewhere while your home is being repaired. It is important to have coverage for such costs since they are significant and can easily plunge your family into financial problems. Although the chances of your home being destroyed are very slim, this eventuality can force you to take loans and living in distress. A homeowner’s cover allows you to live in peace knowing you won’t lose your home in case of anything. There are many types of homeowner’s covers available today that cover anything you can think of including the cost of upgrades, special features and injuries that may occur on your property. Consider getting such a cover. If you are renting, you should take renters insurance instead.

4. Identity Theft Insurance

In this current era where everything revolves around technology and the internet, it is important to protect yourself against identity theft. This kind of coverage may seem unnecessary but take some time and think of the consequences of identity theft. If you take payday loans, use credit cards or have a genuine online presence of any sort, you are at risk. Someone can steal your identity online and use your name to orchestrate crimes. You need money to protect yourself against losses arising from such eventualities. An identity theft policy can also cover legal fees involved when restoring your name. We are all at risk of identity theft today provided we use computers, Smartphones and online products/services. Payday loan giant Wonga suffered a significant customer data breach in April 2017. The incident saw the personal details of 270,000+ customers stolen including bank account details. Any victim with identity theft insurance would have been covered in such an instance. Get the above insurance covers first before considering any others. Motor insurance is equally important although it is mandatory in the UK and most, if not all countries in the world.

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.

Banks Issuing Debt at Fastest Rate in 8 Years While Household Debts Soars

According to the latest Bank of England data, net new issuance of commercial paper and bonds stood at £17.5 billion in November 2017. This statistic shows that November 2017 was the busiest month for UK businesses and banks since October 2009.

Debt markets have been growing at the fastest rate in eight years, and what’s more, bankers expect the trend to continue in 2018. From January to November 2017, UK businesses and banks raised a net £50 billion which was the yearly level since September 2010.

According to Davis Marks, a debt capital banker at JPMorgan, UK banks are expected to be more active in capital markets this year (2018) than they were in 2017. UK banks must, however, refinance existing debt as well as build additional capital to meet the 2022 regulatory requirement deadline.

Labour analysts have been on record warning over rising household debt. According to John McDonnell, the level of unsecured borrowing in Britain may hit record levels very soon. According to remarks he made in December 2017, McDonnell stresses a need for more decisive action from the government in 2018 regarding debt since the UK has already seen a debt crisis with payday loans where payday loan companies were making astronomical profits from people’s financial problems.

Analysts have predicted that the level of unsecured loans per household in the UK will exceed £15,000 in 2018 and could easily surpass £19,000 by 2022 if adequate action isn’t taken.

Million of Britons starting 2018 in debt

The latest National Debtline statistics indicate that 7.9 million Britons are likely to start 2018 with debt accumulated during the Christmas season. The debt advice charity estimates a record 16% of Britons will face difficulties meeting their financial obligations in January 2018 compared to 11% last year. This statistics clearly shows that people will be worse off this year than last year, but all is not lost.

The FCA has new rules in place that require UK lenders to prompt borrowers to repay debt faster. Lenders are also obligated to intervene early in cases of repayment difficulties. For instance, they can cancel interest and/or waive charges accumulated on short-term debt like credit card loans for customers who are in debt persistently.

Quick measures/steps to get out of debt in 2018

In case you are already in debt in January 2018, there are some measures you can take by yourself to repay the debt before more is done by the government and regulators to deal with the increasing rate of household debt. It doesn’t really matter if you took out a short term loan such as a payday loan that you didn’t need. It’s time to take action.

Step 1: List all your debt

If you have more than one loan to repay, you should start by listing all your debt. It may appear obvious; however, most people who take many short-term loans don’t know how many loans they service in a month among other important details such as interest amount and additional fees. A simple exercise such as listing current loans can help you assess affordability accurately preventing you from taking up more loans.

Step 2: Repay the most costly loans first

Step 1 should help you identify expensive debt. Repay such debt first to reduce the total time you take repaying especially if you make more than minimum repayments. Observing this step will also help you reduce the total charges incurred.

Step 3: Halt savings/investments for a while

It’s always prudent to save and invest after getting rid of debt especially if it is short-term debt which accumulates hefty charges in fees and interest. Instead of saving and investing every month, as usual, use the money to offset your debt. However, don’t forget to continue saving/investing once you are debt-free.

Step 4: Consider debt management strategies

If you accumulated a lot of debt during the festive season that may not be repayable easily/faster/comfortably using your monthly savings, you can consider consolidating the debt which is simply; combining many debts into one manageable debt. Many lenders offer this option. You can also visit a financial professional to advise you accordingly given debt consolidation has some risks that must be understood beforehand to avoid more debt problems.

Lastly, don’t get into debt again. If you must take a payday loan or any other type of short term loan, use the loan amount for the intended purposes. Loans should never be misused. Never take loans simply because they are available. You should also take a loan you can afford comfortably.

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.

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.

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.