Some of my constituents have recently contacted me to draw my attention to the issue of high interest payday loans.
One in ten UK households have taken out a payday loan, a frequently cited contributor towards household debt. Following the recent collapse of Wonga and reports of possible bankruptcy of a number of other major highstreet payday lenders e.g. Money Shop, there are concerns that customers face losing thousands of pounds in unpaid compensation.
I was therefore glad to learn that earlier this week the Financial Conduct Authority ordered payday lenders to bring forward compensation for customers who were mis-sold loans, even if it threatens the company with bankruptcy. The FCA said payday lenders must consider the “severity of the consumer detriment that might have arisen” from loans granted in the past, and consider whether they should begin a “redress or remediation exercise, which may include contacting customers who have not complained.”
I will continue to speak up for those who are on the receiving end of unfair lending practices. I would also encourage any of my constituents who have been mis-sold high interest payday loans to contact their payday lender to seek appropriate compensation.