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The Powers That Preside Over Payday Lenders

Most Countries have governing bodies that regulate lending and credit companies in order to ensure good lending practice. These bodies are there for a reason and that is to protect the borrower from unscrupulous lenders or loan sharks. Similarly, there are some voluntary regulatory bodies in the UK that govern all the companies that specialize in lending payday loans to the consumers. As payday loan advances carry quite high interest rates, a consumer needs to be made aware. This is the reason why there are a few regulations that exist in relation to the payday loan lending companies in the UK.

The main licence requirement in the UK is the Consumer Credit Licence as issued by the Office of Fair Trading (OFT). Without a CCL, a lender may not operate. As well as the CCL, there are other requirements that a lender has to undertake in order to operate legally. However, payday lenders are still under attack from the press and media trying to get them to curb high charges.

There are some regulatory bodies that have started maintaining a close watch on the companies that offer payday loans to financially distressed consumers in the UK. The BCCA, or the British Cheque Casher’s Association, is such an organization that has recently drawn up a code of practice for the members. It must be pointed out that the BCCA is amembership that is only voluntary and applies mainly to high street cheque cashing operations. Those companies that are purely internet-based ones do not fall within the members of the BCCA.

The Insolvency Practitioner’s Association have also raised concerns over the practice of short term lending. It is looking to set up a body to regulate all non FSA regulated financial operations. Their proposal is to award companies that perform within the require standards quality marks. The idea being that consumers can see which companies have attained the quality mark and therefore make a more informed decision as to which lender to chose.

As payday lenders are required to express interest rates as an APR, this can be quite confusing to the consumer as an APR does not explain the interest charges very well. Irrespective of this though, a consumer has to be made aware of the APR prior to them taking out a loan.

Payday loans bad credit is extremely useful financial products and can help a person meet his or her short term financial need. Although these short term loans have not been around that long, their popularity has become huge as people struggle to obtain credit due to the current economic situation where banks continue to refuse to lend properly. This popularity is predicted to rise over the next few years, and no credit check loans are here to stay as long as the lenders do not go astray.

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