A payday lender has left the single instalment payday loan market, where loans that must be repaid in one lump sum.
It has also promised to change the way it offers loans and treats customers struggling to repay their debts, following an agreement with the Financial Conduct Authority (FCA).
As well as no longer selling single instalment payday loans, Cheque Centres Limited has also stopped its debt collection telephone calls to customers until it demonstrates to the FCA that improvements have been made. Cheque Centre has agreed a number of other actions with the FCA so it can meet the new regulatory regime, and the FCA will appoint a skilled person to test the changes.
Martin Wheatley, the FCA’s chief executive, said: “This is an early victory for people that use payday lenders. We made our tougher expectations clear to Cheque Centre and they have wasted no time in making changes. I have said before that firms would need to dramatically improve their operation or exit the market, and we are now seeing that happening.
“This is an important step in the right direction and other payday lenders should take note.”
The poor practice was uncovered by the former consumer credit regulator Office of Fair Trading (OFT), and FCA staff on secondment at the OFT. In late March Cheque Centre was sent a letter setting out the regulators’ serious concerns.