Facing criticism, Cheque Centre drop payday loans

14 May 2014, 21:20   By Julia Kukiewicz

CHEQUE CENTRE, one of the UK's largest payday lenders, has stopped offering short term, high interest loans.

payday loan application form
Credit: Rawpixel.com/Shutterstock.com

The lender's decision to, in their own words, "accelerate our exit from payday lending" is part of an agreement with the Financial Conduct Authority (FCA) reached after the regulator found serious problems with the company's debt collection practices.

I have said before that firms would need to dramatically improve their operation or exit the market, and we are now seeing that happening.
Martin Wheatley , FCA Chief Executive

Cheque Centre have also agreed to suspend all debt collection calls to their existing customers and to re-train staff involved with lending.

Today's announcement represents the first blow in what the FCA have long promised: a war payday companies that mistreat their customers.

"I have said before that firms would need to dramatically improve their operation or exit the market, and we are now seeing that happening... other payday lenders should take note," FCA Chief Executive Martin Wheatley said today.

MPs recently criticised FCA action on payday, arguing that the regulator was taking a 'light touch' approach.

Litany of abuses

Cheque Centre have 451 high street branches overwhelmingly clustered with other high street lenders in areas where the average income is low.

As their name suggests, Cheque Centre also offer instant cheque cashing as well as foreign currency conversion and pawnbroking and will continue to do so.

Cheque Centre customer?
Those with loans outstanding still have to repay.
Cheque Centre's helpline is 0800 243028.
See the full FCA statement

As of today, however, they will not offer single instalment payday loans

The firm's abuses, first uncovered by the FCA's predecessor the Office of Fair Trading (OFT), include almost every concern campaigners raise about payday lenders.

The OFT found problems with:

  1. Assessment of affordability prior to granting payday loans to customers;
  2. Handling of customers in arrears;
  3. Handling of vulnerable customers; and
  4. Staff incentive schemes.

Earlier this year, an undercover report from the Mail on Sunday confirmed that staff, under pressure from managers to sign up more borrowers, ignored basic checks and even lent to people that they knew could not afford to repay.

The report also confirmed that staff were abusing their right to take money under a Continuous Payment Authority (CPA), 'swiping' accounts time after time, often several times a day, until there was no money left.

Debt collection calls to stop

But CPA abuse was just one aspect of Cheque Centre's disdain for their customers who were struggling to repay.

In particular, the financial regulator found, staff hounded customers in arrears by phone.

"I missed one payment and [Cheque Centre] rang me 10-12 times a day," one forum user said recently.

Other customers reported that the lender had called them at work.

In a signal of the seriousness of the problems, the FCA have completely suspended debt collection telephone calls to Cheque Centre customers until the firm proves that they have improved their processes in line with the regulator's guidance.

The company will continue to take payments from customers, in line with their pre agreed repayment plans, and customers can still call the company's hotline, shown above, to rearrange payments.

Customers "neglected by the banks"

Despite today's decision, Cheque Centre, like other payday lenders, maintain that they are offering a vital service to people that are ignored by the mainstream banks.

"We continue to believe that there is an opportunity for us to serve those that have been neglected by the banks," the company said in a statement today.

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