Payday loans have earned a bad name in the press and are often viewed as a necessary evil. Their reputation is especially unfair since 2014, when legislation and improvements are implemented to make sure that the payday loan industry remained safe and legitimate.
It was in 2014 when the Financial Conduct Authority took over the industry from the FSA. Before this, payday loans were under constant scrutiny from the media, the Government and debt charities as many borrowers found themselves in spiraling debt with seemingly no way to get out of it. As a result, borrowers would take out further loans to pay off the original debt which just increased the amount they owed overall and created an endless circle.
Despite the reputation that payday loans hold, we can assure that payday loans are safe in the following ways.
As mentioned, the payday loans industry is heavily regulated by the FCA. In the light of the takeover, the FCA introduced a number of strict and tough-to-meet regulations were introduced so that consumers would remain assured that they were safe and they were being offered secure short-term credit products.
One of the things that the FCA introduced were price caps to be applied to short-term consumer credit. This aimed to increase the safety and security of payday for the borrowers. This way, borrowers can be sure that they are being treated fairly by the lenders, meanwhile restricting the level of debt they can fall into when they take out a loan.
Within the space of a few years, payday loans have become one of the UK’s safest financial products. This is thanks to the modification made by the FCA. When looking at a loan provider, you should always make sure their company name is present on the FCA register. If not, they are likely unethical and could steal your details. Any which are on the FCA register are sound and you can have peace of mind that your details are safe.
Unethical Brokers Are No More
After the FCA’s new rules were introduced, unethical lenders and brokers had no choice but to leave the industry as they simply could not carry on functioning. Now there are a select few number of lenders which you can be certain are legitimate, rather than the thousands which were operating before which could go either way. With the lenders and brokers which are left, you can remain assured
Furthermore, the number of high cost credit loan offers declined as well as the number of people who were taking them out. It became more of a task for applicants to be able to qualify for loans.
With the recent introduction of the General Data Protection Regulation, there comes further security for the borrower. The GDPR was passed across the entirety of the European Union and came into legal force in May 2018.
The new rules are there to give consumers more power over how companies use and transfer your personal data. This goes for all companies, but GDPR plays a huge role in ensuring the security and safety of payday loans in the UK.
In order to get a payday loan, you will have to provide the lender or broker with your personal information which includes things like your address, bank details and credit history. Thanks to GDPR, there are now rules in place to ensure that these details remain safe with the provider. Your information will be held safely on a secured network.
Always check the lenders website before applying
To make sure that you do remain as safe as possible, you should look for the following on a credit providers website.
When looking at online payday loans, check the address bar. At the beginning of the web address, it will either say HTTP or HTTPS. If it says the latter, the “s” stands for secure which means that while you are using the website, you know that your details are protected. If you do not see https://, do not enter your details just in case.
You should also check out whether the company is on the Financial Conduct Authority’s website. If they are not present on the register, then they are not secure and do not comply to the FCAs rules which are in place in order to keep you safe.
In addition, check to see if the short-term lender is a member of any other professional bodies such as the BCCA, which can indicate legitimacy.