Payday lenders are facing a barrage of new guidelines to adhere to as both the Finance and Leasing Association and the Consumer Finance Association gear up to launch codes of practice for the industry.
On Wednesday (1 Feb) the Finance and Leasing Association (FLA) will launch a revised lending code aimed at short-term credit providers, among others, which will recommend that the number of times a short-term loan can be rolled over be restricted to three.
The Consumer Finance Association (CFA) meanwhile, has said it will launch an enhanced code of conduct for its members, including eight of the nine largest UK payday lenders, which is also looking at issues such as rollover limits and transparency in advertising.
It follows a period of intense scrutiny on the industry, which has culminated in the Office of Fair Trading (OFT) investigating the sector, and the Treasury citing payday loans as an area where regulation needs to be toughened up.
In a statement the CFA said: “The development of the Consumer Finance Association’s (CFA) enhanced code of Practice is well-under way and we are working with BIS and other major trade associations to create a code that will include a wide range of consumer protections.
“As an industry, we are looking at various measures including limits on number of rollovers, how we treat individuals that get into trouble, transparency in advertising and clear consequences for non-compliance with the code. We anticipate the launch of our enhanced code in the spring.”
The CFA launched its first code of practice in the House of Commons last year.
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