Citizens Advice Scotland has welcomed the news that Wonga.com are to write off the debts of thousands of their customers – following meetings between the company and the financial regulator.
Over the last few years the CAB service has seen a huge increase in the numbers of people who are in crisis debt to payday lenders. So we have been campaigning hard to expose the faults of lenders and calling for action like this.
CAS Head of Policy Susan McPhee says,
“This action against poor lending practices by Wonga is a very welcome step by the regulator. Given that the company has styled itself as the ‘gold standard’ of payday lending, this is another embarrassing admission of guilt after their recent attempts to trick customers with fake lawyers.
“Some payday lenders have been stubborn to change and do proper and correct checks to ensure the debt is affordable to borrowers. Our own research showed 65% of payday loan borrowers in Scotland felt their personal finances had not been checked by the lender before signing them up.
“Today’s action, which will see the debt of over 300,000 customers written off, will be a message that sounds loud and clear to other lenders. They must ensure the debt they are signing people up to is affordable for that person’s income. Anything less will now result in serious repercussions.
“Consumers too should feel empowered by news like this, and should feel confident about standing up for their rights. We still urge people to be cautious and to make sure they know exactly what they are getting into when they take out a loan. But where lenders have clearly flouted their responsibilities, people should report them and get advice on how to get redress. You can do this at your local CAB or through our consumer helpline - 03454 040506.”
The Scottish CAB service now sees more than 100 cases every week of people who have got into payday loan debts they can’t handle.