Payday loan companies have been under fire as more and more disreputable payday advance lenders take advantage of groups such as students, leading the Finance and Leasing Association to revise its regulations – but many feel these new rules will make little difference to those victimised by these rogue lenders.
The new rules cover many providers of high interest credit in addition to the short term loans provided by payday lenders. Measures such as banning commission payments for the sale of store cards by shop staff and delaying benefits such as discounts for at least a week after a store card is taken up by a consumer were put into effect, as well as those to aid customers facing financial distress, particularly customers with mental illnesses and her mental disabilities.
Lenders are now required to increase the transparency of their loans in regards to costs prior to approving a loan, including the reiteration of the fact that payday lending is ideal for short term borrowing but is decidedly inappropriate for longer term needs. Payday lenders are also now restricted to extending or ‘rolling over’ short term loans more than three times, and the new regulations require that new credit assessments be carried out each and every time.
While all fifty members of FLA that operate within the consumer credit markets are bound to follow the code, critics say that it will do little to curb the rise of underhanded payday lenders that ruin the reputation of those operating more responsibly. This is because there is only one major instant cash loan provider within the FLA, with three quarters of the market instead under the aegis of the Consumer Finance Association.