Research by the FCA has revealed that some lenders employ robust pressure tactics, including in some cases encouraging clients to manipulate their income details on applications.
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div>Research by the FCA has revealed that some lenders employ robust pressure tactics, including in some cases encouraging clients to manipulate their income details on applications.
The evidence from the study undertaken in November and December last year, discovered poor behaviour from firms, which included performing little or no affordability checks.
It was also found that some firms pressure clients to take our loans without being informed on total amount to be paid, APR or potential repercussions of missed repayments.
The regulator’s research even found some of those firms encouraging applicants to manipulate income details.
The study focused on logbook lenders, companies who advance loans secured on a debtor’s vehicle.
Christopher Woolard, Director of Policy, Risk and Research at the FCA said: “People who use logbook loans are often in difficult circumstances with few other borrowing options. The last thing that should be happening is for them to be squeezed yet more or even threatened, but that is what our research has found.
"Our new rules give us the power to tackle those firms found not putting customers’ interests first and remove them from the market if they don’t improve. Logbook lenders should consider this as fair notice to improve and put their customers first or we won’t hesitate to take action.”
All logbook lenders must become fully authorised by the FCA by April next year. With the Authority now overlooking the industry it is hoped that standards will improve and applicants will be at less risk of being given loans if they are not suitable.
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