FCA sounds redress warning over high cost credit
BOSSES at payday lenders have been warned to assess their lending activity amid concerns from the City watchdog about rising complaints.
The Financial Conduct Authority has written a “Dear CEO” letter to platforms providing high-cost short-term credit – which includes some peer-to-peer lending firms – to check on their creditworthiness assessments, particularly for repeat borrowers, and to assess whether customers are being treated fairly.
It warns that firms must be able to fund any remediation costs from complaints and should inform the FCA if they are unable to.
The letter follows the collapse of payday lender Wonga in August.
Read more: Consumer credit complaints surge
Jonathan Davidson, director of supervision at the FCA, said where firms identify recurring or systemic problems in their service, they should consider offering redress or remediation, which may include contacting customers who have not complained.
“We expect firms to make appropriate provision for any remediation which may be required, including associated costs for example, fees to the Financial Ombudsman,” Davidson said.
“If doing so calls into question your firm’s ability both now and in the future to meet its financial commitments as they fall due, you must notify the FCA immediately.”
Read more: Consumer credit made up the bulk of financial complaints last year
Read more: P2P lenders may face a higher bill from City watchdog
