In these cases intervention from the regulator was administered swiftly, redresses were agreed and practises improved. Some of these investigations are still ongoing.
Other flaws included system errors that led to customer detriment as well as providers failing to direct people to free debt advice and being unsympathetic and inflexible with some distressed clients in financial difficulty.
The review scrutinised a sample of firms including online and high-street businesses holding around 60 per cent of the market share between them.
The watchdog listened to calls with customers and reviewed case files to look at the experiences customers had with firms when they were struggling to repay loans.
“When we took over responsibility for regulating consumer credit, in April 2014, we said that tackling poor practice in the high-cost short-term credit market was a key priority for the first year,” said the FCA.
“We had seen practices that showed that customers, who were often struggling to make ends meet, were not being treated with sensitivity. We wanted to take a close look at this sector to find out how HCSTC providers, including payday lenders, were treating customers who struggled to repay.”
However, the review did find that a number of financial providers are making changes to improve, which have included changing senior management, training staff to deal with struggling customers and improving monitoring, compliance and managing risk.
The FCA has given feedback to each firm in their review about the good and poor practices, and in January, reminded all firms that if they are to conduct regulated consumer credit activities, they must show that they are treating customers fairly.
The Regulator has reminded all firms seeking consumer credit permissions, that the FCA will not authorise any activities if the firm fails to meet its threshold conditions.
The full Thematic Review is available to view online.
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