Have Payday Loans Improved over the Years?

You’re not the first to look at this question and wonder if there is possibly a positive answer. Well, there is good news and bad news. Read on to find out: Have payday loans improved over the years? Or is it all a facade? Payday Loans Net discovers the truth in this full guide.

A Full Guide to Payday Loan Changes over the Years

In this guide, we answer the question: Have payday loans improved over the years? But first, we need to put the research into some context. The first chapter of this mini-guide explains the history of the payday loans UK industry. We focus on the changes made since the Financial Conduct Authority took over its supervision and the regulations which came into effect from 2014-15. Then we compare the past and future of payday loans, to get a better understanding of the changes in the UK short term loan industry.

Table of Contents
Ch. 1: A Brief History of the Payday Loan Industry including a Timeline
Ch. 2: The Application Procedure for a Payday Loan – Have there been Improvements to ensure Responsible Lending?
Ch. 3: Access to Payday Loans, Treatment of Borrowers & Methods of Payment
Ch. 4: How are Payday Loan Companies treating Borrowers with Financial Difficulties?
Ch. 5: What Happens to Customers whose are Refused a Payday Loan?
Ch. 6: The Findings of Other Organisations about Payday Loans Post-Regulation
Ch. 7: The Recommendations of the CMA about the Payday Loan Lending Market
Ch. 8: How to Ensure a Positive Payday Loan Experience
Conclusion: Have Payday Loans Improved? Which areas still need Improvement and/or Further Regulation?

Entitled ‘Payday Loans after the Cap – Are Consumers Getting a Better Deal? The report by the Citizens Advice published in 2016 makes some fascinating points. It presents some recommendations to improve regulations in the industry. Chapters 2-5 of this mini-guide concentrate on the findings of this report.

Statistical Significance in the Payday Loans Market

One thing which becomes apparent when you read the statistical evidence regarding the payday loan industry is the enormous differences in research studies carried out by different bodies. This is because bodies like Citizens Advice aren’t going to come into much contact with borrowers who had a positive payday loan experience. This is a serious problem, and affects the conclusions drawn from a ‘typical’ experience. Because of this limitation, we felt it crucial to look beyond this research and see if other organisations had supporting results.

The Application Process and Access to Payday Loans

Chapter 2 concentrates on the application process. We discuss affordability and credit checks for would-be borrowers.

As well, we will look at what efforts have been made to ensure that the terms and conditions of the loan are easily understandable. Has the use of pictorial sliders helped borrowers to understand the final cost of their short term loan?

Chapter 3 looks at access to payday loans. Has it become harder to receive a loan in light of stricter criteria recommended by the FCA? The inappropriate use of CPAs and the problem of repeat borrowing were two of the main criticisms of the industry before 2014. So, we turn our attention to these aspects of the payday loan experience to assess whether they continue to be problems.  Have any other problems arisen to take their place?

The treatment of loan defaulters is detailed greatly in Ch.4. It is another area where the payday loan industry received a great deal of adverse media attention. In chapter 4 you’ll be able to read what the research of Citizens Advice revealed about this.  From affordable repayment plans to the implementation of the price cap, we explain whether there have been real improvements. And have payday loans improved in a way that benefits all parties involved?.

The FCA intended its legislation to block some people’s access to a short term loan. We assess how they achieved this in Chapter 5. A point to think about is whether this had an impact on their financial situation and their lives in general. Did these people have a different solution when a payday loans direct lender refused their loan application?

Analysing the FCA and FOS

To present a rounded picture of the payday loan industry in the UK, we took a look at other pieces of research. For example, we looked at what effects FCA legislation has had on the experiences of payday loan recipients. We then compared it to what was found by Citizens Advice, as mentioned in Ch.6.

We then looked at the evaluations of the Financial Conduct Authority regarding their achievements in regulating the industry.  An important aspect of the FCA is their Financial Ombudsman Service to which payday loan customers can address any complaints they have.  What do statistics tell us about improvements in payday loan companies? What are the most common reasons that borrowers complain?

Finally, to make sure that the industry had a chance to present their side of the story, we present the viewpoint of the Consumer Finance Association.  As the representative body and mouthpiece of the industry, we explain their opinion of FCA regulations in general (their pros and cons) as well as their reaction to the Citizens Advice report.

In chapter 7, we summarise the findings of the CMA (Competition & Markets Authority) investigation. We discuss any improvements they have noticed in the payday lending market and whether they have recommendations for further changes and/or legislation.

So, Have Payday Loans Improved?

In the final chapter of this guide, we sum up the findings of all our research. With this, we have created a step-by-step guide for anyone planning to apply for such a loan. This guide takes the borrower from their original decision to take out a loan all the way through the application procedure. It also includes what to do if they have any reason to complain about the business practices of their loan provider. Read the full guide to find out: Have Payday Loans improved? Or is it all talk and no show?

Written by: Olly Landsman
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