Payday Loan Lenders and How They Have Changed

Payday loan lenders and the product they offer have evolved somewhat in recent times. This evolution is thanks to the appointment of the Financial Conduct Authority as the body responsible for the operations of the consumer serving market in its entirety. The Financial Conduct Authority or FCA as many of us will know them were introduced to bring this online market into order and effectively stop and remove some of the poor lenders and the practices they followed. Through extensive research it became obvious to the FCA that there were a large percentage of payday loan lenders who were not effectively serving their customers and therefore acting in a manner which was irresponsible. The FCA has placed a large amount of focus on the concept and implementation of responsible lending through its changes in an effort to ensure payday loan lenders who exist in the current market place are able to serve consumers in a manner which is considered and fair.

Through new guidelines and rules the FCA has been able to mould the payday loan lenders who operate in today’s market place. All lenders were subject to an assessment by the FCA and furthermore approval and regulation if they wished to continue trading. This meant actively bringing their practices in line with FCA requirements and evidencing these actions to be true. This is fantastic news for consumers because it provides peace of mind that all modern day payday loan lenders are acting in line with rules and regulations directly set out by the FCA. The appointment of the FCA has not only helped consumers though and in fact lenders have been able to gain a greater level of understanding and knowledge through the support of the FCA. Arguably payday loan lenders have never actively intended to lend to customers who were never going to be able to repay the loans granted; from a business point of view this simply doesn’t make sense. However that said, it is evident that some lenders were not acting in a manner which was ultimately responsible and affordable to consumers.

Through the support of the FCA payday loan lenders in the current market place are better able to understand the concept of affordability when it comes to making decisions regarding their applications. This means the steps taken by the FCA have enabled lenders to understand what needs to be accounted for when assessing an applicant. This not only means the verification of some of the more obvious things such as the applicants identity, address and place of work but also related to how the information within the available credit reference files can be of so much use. Nowadays lenders are reviewing a larger cross-section of credit file data and then making comparisons between this data and that which has been supplied and disclosed as part of the application process. Where consumers for example state in the application that they currently have no short term loan borrowing but the credit reference file shows a different story; lenders can act on this information accordingly.