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CAS backs new crackdown on payday lenders

Citizens Advice Scotland have backed the Financial Conduct Authority (FCA) in its latest plans to regulate the Payday Loans industry, saying it’s ‘a good step in the right direction’, but have also said more action is needed to protect people from crisis debt to payday lenders.

CAS Chief Executive Margaret Lynch says, 

“The number of people who are getting into problem debt because of Payday Loans has risen considerably in the last few years. At the moment Scotland’s CAB advisers are seeing over 100 people a week who are stuck in crisis debt to payday lenders. 

"The experience of these clients is very distressing. These are usually people who were on a low income to begin with, who thought a loan was their way out, but whose debts have quickly spun out of control, and have brought them real misery and poverty. Many feel that the terms and conditions of the loan were not clearly explained to them, and that the high interest rates were not fully explained. In a number of cases the lenders have gone into the person's bank account and removed money without their knowledge. In others, where people got into difficulties and asked the lender for help in repaying the loan, they were simply offered another loan, at similarly high rates. 

“It is notable that the things being outlined today are all areas in which the payday loans industry itself had promised to clean up its act, but has failed to do so. Last year the industry signed up to a Code of Conduct which included pledges on many of these specific issues. We have been monitoring the experience of borrowers this year, and the evidence is clear that many lenders are NOT sticking to those promises. 

“So we believe it is right that the regulators should crack down on this. If the lenders themselves cannot stick to their own promises to put their house in order, then the FCA should step in and force them. That is what a regulator is for. So this is a good step in the right direction. But we need to see more, and tougher, action taken against rogue lenders. 

“We need a lending industry that is open and transparent, and which offers consumers a fair deal but also protects them from financial ruin.” 

CAS is continuing to gather that evidence from the public, and and want to hear from more people who have had experience of payday loans in the last year. Our survey is at

We will publish our findings next month.