Concerns over doorstep lenders

Brought to you by the News Guardian.
Brought to you by the News Guardian.

Residents are being warned about the tactics of some doorstep lenders.

Citizens Advice North Tyneside says lenders are putting people at risk of serious debt problems due to their tactics.

A new report by the charity has identified a number of concerning practices by some doorstep lenders.

They have raised issues with the harsh debt collection methods, using intimidating behaviour to collect repayments and in one case escorting a relative to a cash machine to collect the money; irresponsible lending with unsatisfactory checks made on whether the person could afford a loan; and putting pressure on people to take out a new doorstep loan to pay off existing debts.

Last year, Citizens Advice helped an estimated 23,000 people with unmanageable doorstep loan debts.

Citizens Advice chief executive Gillian Guy said: “Some doorstep lenders are putting people at risk of escalating debts with their irresponsible actions.

“The personal nature of doorstep loan selling and debt collection can put customers in a vulnerable position. Our evidence shows some lenders are taking advantage of that relationship and causing serious harm to borrowers by turning up unannounced or putting clients under pressure to repay or take on more debt.”

“It’s important there is strong regulation of high cost credit markets to make sure companies put the needs and interests of consumers at the heart of their services.

“The FCA’s intervention drastically reduced problems in the payday loan market – we now want to see similar protections introduced for consumers using other high cost credit products, including doorstep loans.”

Citizens Advice has submitted evidence and recommendations to the Financial Conduct Authority to improve problems in other parts of the sector – including the guarantor loan and rent to own market.

The charity wants the FCA to extend its cap on payday loan interest rates and fees across the market to protect consumers. It also wants the regulator to strengthen its affordability guidance into rules to ensure responsible lending across the market.