Payday not the only problem

Appearing at the Treasury Select Committee today Which? executive director Richard Lloyd said the regulator must look at the behaviour of more mainstream credit providers and how consumers are led to the most extreme and expensive forms of credit.

Speaking on the treatment of financial services consumers, Richard Lloyd said:

“The Financial Conduct Authority hasn’t yet taken a system wide view of consumer credit and the behaviour of more mainstream credit providers.

“We need to see the FCA taking action on fees and charges that are excessive and disproportionate. We’ve had the crackdown on payday but we have seen many unfair practices elsewhere in the credit market, including overdrafts and credit cards.

“The whole consumer credit system needs to be addressed. The FCA needs to address the very early steps of the customer journey and how consumers are drawn into unmanageable debt and the most extreme and expensive forms of credit.”

Speaking about Wonga’s agreement with the FCA to write off 330,000 of it’s customers debts, Richard Lloyd said:

“The FCA has unfinished business where the approach they have taken with Wonga must be applied to other payday lenders. They need to ensure that people who have got into debt with another lender to repay their Wonga loans have fair treatment too.”


More than 42,000 people have signed up to support the Stop Sneaky Fees and Charges campaign to put an end to fees across the financial sector that are hidden, excessive or make the total cost difficult to understand and compare. People can sign up to our campaign here:

We are also calling on the Chancellor to use his Autumn Statement to end mortgage confusion and stop sneaky fees and charges that prevent people from getting the best mortgage deal.

Which? is calling for:

  • The FCA to use its credit card market study to investigate how lenders can encourage shopping around without it damaging their credit record, make adverts clearer, make it easier to compare credit card deals, stop excessive penalties and help people struggling with debt.
  • The Government and the FCA to explore other ways to present the total cost of a mortgage to make mortgage price comparison easier, make the full cost of a mortgage clearer with all compulsory fees included in the advertised costs, and ensure additional fees reflect lenders actual costs.
  • All banks and unauthorised overdraft providers to allow their customers to opt in and opt out of unauthorised overdrafts at no extra cost, and help consumers to select the best current account for their needs by providing easily accessible transaction data for consumers as part of the Government’s midata programme.
  • The FCA to continue to scrutinise payday lenders business models to ensure they are carrying out proper affordability checks and are not relying on customers defaulting or rolling-over their loans.


Which? research:

  • In the last year, 46% of people have paid a fee or charge on a financial product
  • Of these, two thirds (68%) agree that companies use separate fees or charges to trick people into thinking that the cost of their product or service is lower than it is
  • Two thirds (68%) also thought that companies make fees and charges more complicated than they need to be in order to confuse customers
  • Six in 10 (62%) agree it is difficult to compare the total cost of financial products and services as the fees and charges vary so much.
  • 56% of people have used a credit card in the last 12 months.
  • 14% of credit card users have incurred a fee for missed, bounced or late repayments in the last year – this rises to 25% for people who don’t repay their balance in full.
  • Around 2.5 million people, approximately the same number as those that have used a payday loan, say they have used an unauthorised overdraft in the last 12 months.
  • More than two thirds (68%) say the fees and charges are too high or unfair and around a third (36%) have been surprised by the amount they were charged.
  • Average mortgage arrangement fees have almost doubled in the last five years, from £878 in 2009 to £1,588 in 2014.
  • Just 3% of people could correctly rank the cost of five two-year fixed-rate mortgage deals when displayed using typical information, including APR.  This rose to 36% when presenting the total cost of the mortgages over 24 months.

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