By Paul Clark, CEO, Charter UK
The increasingly poor record of complaints generated by payday lenders — and their middlemen - is clearly not an example of treating customers fairly, and a strong indication of why this corner of the market needed tighter regulation in the first place. However this news isn’t as gloomy as it might appear.
Consumer credit, unlike mainstream banking, only came under the remit of the Financial Conduct Authority in April of this year, having previously been regulated by the comparatively relaxed Office of Fair Trading. As figures from the Financial Ombudsman Service cover the last 12 months, it’s not yet clear how much progress has been made since this change, and it would therefore be unfair to make judgments on an industry that is still in transition.
Also, because the FCA’s guidelines require firms to notify customers of their right to go to FOS with any grievances, the significant number of complaints being sent to FOS actually indicates an increased awareness from consumers, as well as a willingness of many consumer credit firms to comply with these new rules.
Whilst this is encouraging, simply notifying customers of their right to escalate their complaints is not enough. In order to comply with TCF (Treating Customers Fairly), firms need to ensure that they have the systems and processes in place to spot and repair the issues that are causing consumer detriment, without waiting for FOS or the regulator to raise the red flag.
For professional firms that are willing to make this change and embrace their role in this important market, the recent tide of complaints should be used as a roadmap to show them exactly where change is needed, and also give them solid guidance on what this change will look like.