More than 9 out of 10 customers say that proper checks were made on their payday loan application and that they fully understand the cost of the loan
New research into the payday loan industry, conducted by international research agency, YouGov, reveals that the experience of most people who use payday loans contradicts the public perception. UK customers are getting the benefits of the commitments to responsible lending set out in the industry’s Good Practice Customer Charter.
The YouGov snapshot revealed that more than nine out of ten (93%) customers, who had borrowed from lenders who are members of the Consumer Finance Association (CFA) since an industry Code and Customer Charter was introduced, felt that proper affordability checks were completed.
The Charter, which came into effect on 26 November last year, tells customers what standards they can expect from payday lenders. These standards focus on clear communication, affordability assessments, responsible collection and help for those in financial difficulty.
The survey also revealed that customers are savvy and enter into their loan agreements with their eyes wide open, with 92% saying that they understood the total cost of the loan before they committed to it.
Short-term lenders use continuous payment authority to collect payments from customers’ bank accounts. One of the commitments set out in the Customer Charter was to ensure that consumers understood the method of payment. This research reveals that 85% of customers fully understood how payments would be taken.
The CFA, whose members make up 60% of the industry, commissioned YouGov to independently survey over 500 customers in order to monitor compliance with the Customer Charter.
Russell Hamblin-Boone, Chief Executive of the Consumer Finance Association, which represents major short-term lenders operating in the UK, said:
“As part of our commitment to continue to drive up standards in the industry we conduct regular research with our members’ customers to check compliance with our standards. This research sits alongside a wider compliance monitoring framework and so this snapshot is encouraging because it shows that customers of lenders who belong to CFA have benefitted from the high standards we have put in place.”
“We appreciate that these results don’t speak for the whole payday industry, and there is still work to do to drive up standards for all lenders. However, this snapshot not only echoes the positive customer experiences highlighted by uSwitch recently, but they will also help consumers identify a responsible lender when doing their research into a short-term loan.”
For more information, or for interviews with the CFA, please contact the CFA’s Communications Team:
- Richard Griffiths, Head of Media: firstname.lastname@example.org or 07875 653 959
- Rhiannon Thompson, Head of Communications: email@example.com or 07834 266 639
About the research
YouGov surveyed 544 payday loan customers of CFA member organisations. Interviews were conducted using both online and telephone methodologies. The interviews were completed between 06/08/13 to 16/08/13.