Payday Lenders are Now Agreed with New Code of Lending Practice
CFA (consumer finance association) has enforced a new code of practice
for payday lenders. The code is designed to protect consumers who borrow
payday loans but financially vulnerable. Lenders have to stick on the
minimum standard outlined in the code. CFA has proposed a deadline for
lenders to ensure that they will do the same.
Several things are included to keep lenders within limit that include a
limit of rollover of payday loans. It also allows for some extra
repayment time to consumers struggling with their financial situation.
In this summer, the court has also included that the parts of a charter
is also agreed with the government and other parts of economic industry
in UK. The new code allows lenders to roll over a loan only maximum of
three occasions. Customers surely get minimum 30 days repayment period.
It is also mentioned in code that interest will be frozen if borrower is
struggling with financial hardship.
The office of fair trading (OFT) has finalized its investigation on
payday loan companies and at the same time new code has been issued for
lenders. OFT was investigating several payday loan companies through
formal way after getting complains about their aggressive debt
collection practices. CFA chief executive, Russell Hamblin Boone has
stated that bring the code in practice is a significant step to control
payday loan industry. It makes the members of payday loan industry
responsible and also helpful to end corrupt lending and collection
Executive has further stated that the association will also introduce an
independent monitoring framework. It will continue its work with
regulator, government and consumer group to set high standards. Other
lending industry like logbook loans and personal loans should also be
aware about their practices. The consumer credit trade association, BCCA
and finance and leasing association are also agreed with the new