Comparison site uSwitch has responded to the Financial Conduct Authority’s (FCA) announcement that payday lender CashEuroNet will pay out £1.7 million in compensation to customers.
Nicolas Frankcom, money spokesperson at uSwitch.com, said: “While the compensation ruling is a victory for consumers, it’s unacceptable that vulnerable people were offered unaffordable loans in the first place. Although the FCA has clamped down on payday lenders, it won’t make up for the emotional strain caused by mounting debts that customers could never afford to repay.
“This isn’t the first time for payday lenders – last week The Money Shop paid out millions in compensation and in 2014 Wonga also wrote off thousands of loans. It may also not be the last. With millions of payday loans estimated to have been taken out in the UK, there’s every chance this issue could snowball into the next PPI scandal.
“This latest breach of consumer trust exposes the ongoing problems with short term credit, as many feel they have nowhere else to turn. Yet there are other, potentially cheaper options like using your authorised overdraft, talking to credit unions and peer-to-peer lenders or even borrowing money from friends or relatives.
“We encourage anyone affected to check their credit report to ensure all details of the loan have been removed from their records.”