How payday loan changes unfolded


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Here are some key events showing how the controversy over the payday loans industry has unfolded and a crackdown been put in place:

:: March 2013 - The UK's biggest payday lenders are threatened with being put out of business after a damning report uncovers evidence of ''widespread irresponsible lending''.

The Office of Fair Trading's (OFT) report is the culmination of a large-scale probe into the sector, including spot-checks on household names such as Wonga.

The regulator hands the 50 biggest players a 12-week deadline to take ''rapid action'' and prove they have cleaned up their act.

:: May 2013 - Payday lenders press MPs not to bracket all their customers as being ''vulnerable''. A report by short-term lending trade body the Consumer Finance Association (CFA) finds that more than one third (34%) of payday borrowers have an income of between £10,000-£19,999.

:: June 2013 - The OFT refers payday lenders to the Competition Commission for a full-scale probe, saying it has found ''deep-rooted'' problems.

It finds some firms' business models appear to be based around customers taking out loans which they are forced to roll over because they cannot afford them.

This leaves the customer trapped with that firm because they would struggle to switch to anyone else. Up to half of lenders' revenues are found to come from the extra charges and interest coming from loans being rolled over.

The Competition Commission has since been superseded by the Competition and Markets Authority (CMA), which has taken over the investigation.

:: July 2013 - It emerges the Archbishop of Canterbury has told Wonga the Church of England wants to "compete" it out of existence as part of its plans to expand credit unions as an alternative to payday lenders.

"I've met the head of Wonga and we had a very good conversation and I said to him quite bluntly 'we're not in the business of trying to legislate you out of existence, we're trying to compete you out of existence'," Most Rev Justin Welby tells Total Politics magazine. "He's a businessman, he took that well."

:: August 2013 - The OFT says almost half the lenders who were ordered to prove their business practices are up to scratch have thrown in the towel, with 19 out of 50 firms it investigated deciding to call it a day.

Citizens Advice launches a campaign urging payday loan customers to "fight back" if they have been mistreated by a lender by making an official complaint to the ombudsman. Citizens Advice says that in three-quarters of cases (76%) it has examined, borrowers would have grounds to take a complaint to the Financial Ombudsman Service (FOS).

:: November 2013 - More than one million people plan to take out a payday loan to cover the cost of Christmas 2013, research by Government-backed body the Money Advice Service (MAS) finds.

:: February 2014 - City regulator the Financial Conduct Authority (FCA) publishes a finalised set of rules for when it takes over supervision of the payday lending market in April, along with the rest of consumer credit.

Martin Wheatley, the FCA's chief executive, says the rules will "give us strong new powers to tackle any firm found to be overstepping the line".

Debt advice charity StepChange also reports it has seen the number of cries for help from people drowning in payday loan debt almost double last year, including nearly 14,000 clients who were struggling with five or more loans.

StepChange, which says loans are causing ''widespread harm and misery'', dealt with £110 million worth of problem payday loan debt in 2013.

:: March 2014 - Payday lenders face a new inquiry to see how sympathetic they are when customers struggle to pay back their debts, the FCA announces.

The FCA says it wants to see whether payday firms and other high-cost short-term lenders are putting too much focus on profits rather than consumers' interests.

:: April 2014 - Supervision of the whole payday lending industry passes from the OFT to the FCA. The FCA immediately starts putting its tough new rules into action, including forcing payday firms to provide financial health warnings in emails, online and in texts and signpost people to free debt help.

Consumers are told: "Warning: Late repayment can cause you serious money problems. For help, go to"

:: May 2014 - Analysis of FCA data by the Financial Times suggests that the crackdown is forcing a "mass exodus" from the quick credit market.

It says at least one third of the UK's 210 payday lenders had failed to apply for permission to operate under the new regulatory regime introduced a month earlier.

:: June 2014 - The CMA releases provisional findings from its competition investigation and says that payday loan borrowers are paying around £60 a year over the odds because of problems shopping around. It suggests setting up an independent price comparison website for payday customers.

A new service to help payday lenders improve decisions about who they should grant a loan to by giving them a more up-to-date snapshot of a consumer's borrowing habits goes live.

Wonga, QuickQuid and Pounds to Pocket, are among those who sign up to the real-time information sharing service, which is called Moda and is launched by credit reference agency Callcredit.

The FCA announces that Wonga is to pay £2.6 million in compensation after chasing struggling customers with fake legal letters in order to pressurise them into paying up.

Between October 2008 and November 2010, the firm sent correspondence to about 45,000 customers in arrears from non-existent law firms threatening legal action.

:: July 2014 - The payday industry comes under more new rules overseen by the FCA. From July 1, payday firms have to include risk warnings in television advertising.

They are also banned from rolling over a loan more than twice and they will only be allowed to make two unsuccessful attempts to claw money back out of a borrowers' account using a type of recurring payment known as a continuous payment authority (CPA).

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