Amanda McSorley

By Amanda McSorley amandamcsorley

Thousands of customers struggling to meet the demands of notorious payday lender, Wonga, will have their debts written off.

The Financial Conduct Authority listened to the concerns of Citizens Advice about the practices of high cost credit firms and introduced new rules to govern the industry. A major problem was companies, such as Wonga, not checking whether customers could afford their loans in the first place, and our advisers saw clients’ debts soar as rollover deals were offered to cover the original amount.

When the FCA took over regulating to industry in April, one of its first actions was to ask Wonga about its relending rates and the information it received illustrated that it was not ensuring customers could repay loans in sustainable way. Wonga has entered into an agreement, known as a voluntary requirement (VREQ) that requires it to make significant changes to its business immediately.

That means around 330,000 customers who are currently in excess of 30 days in arrears will have the balance of their loan written off and will owe Wonga nothing. Another 45,000 customers who are up to 29 days in arrears will be asked to repay their debt without interest and charges and will be given an option of paying off what is owed over an extended period of four months.

Wonga will be writing to customers to tell them if they are included in the redress scheme by October 10, but they should continue to make payments until they are contacted. If you are experiencing problems repaying you should contact Wonga.

The action taken by the FCA also means Wonga will have ensure people can afford to take out loans in the future and Citizens Advice backs the FCA’s hope that its action will be a clarion call to other payday lenders.

“We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations. This should put the rest of the industry on notice – they need to lend affordably and responsibly,” said Clive Adamson, the FCA’s director of supervision.

To find out how your payday lender should be treating you visit www.adviceguide.org.uk and if you are thinking of taking out a loan visit the site to look at all your options.

Amanda McSorley joined the Research and Campaigns Team at Lincoln and District Citizens Advice Bureau in February 2013. She is a former journalist and newspaper editor, with 30 years’ experience of covering the issues that impact people’s lives.

By Amanda McSorley amandamcsorley

“You can tell who controls the purse strings in your house.” It’s a light-hearted comment often made to friends and colleagues about their finances that’s usually laughed off by the recipient. However, Citizens Advice fears that sometimes behind the smiles are partners or family members exerting so much financial control that it amounts to domestic abuse.

Financial abuse is one form of coercive behaviour that results in the victim’s ability to access, use and maintain economic resources being controlled by another. Examples include perpetrators pressurising the victim to take out credit, interfering with controlling benefits, income, savings, education and employment.

It can be indicative of other forms of domestic abuse, but even enacted in isolation it affects the victim’s wellbeing and safety, often impacting on other problems such as debt and welfare benefits.

There is little evidence about how widespread financial abuse is in the UK, but the results of a recent pilot project, ASK – in which CAB advisers routinely asked clients about domestic abuse while helping with other issues – revealed it may more prevalent than previously believed.

Citizens Advice has launched a national research project that aims to map understand clients’ experience of financial abuse; how advisers see and deal with this issue and what can be done to improve clients’ circumstances. It will be using existing CAB evidence as well as new data gathered from a survey sent out to all 338 bureaux – advisers from Lincoln and District CAB have already responded. This will look at the extent of abuse and what form it takes, its impact on clients and how it can be dealt with.

The resulting evidence will see Citizens Advice well placed to influence decision-making as the Financial Conduct Authority (FCA) turns its attention to the area of consumer vulnerability.

Addressing financial abuse is also relevant against the backdrop of the planned rollout of Universal Credit, especially the impact of the UC single household payment, and in dealing with the aftermath of the changes to legal aid.

If you think you are a victim of financial abuse, CAB advisers can help.

Amanda McSorley joined the Research and Campaigns Team at Lincoln and District Citizens Advice Bureau in February 2013. She is a former journalist and newspaper editor, with 30 years’ experience of covering the issues that impact people’s lives.