The ‘short term loan’ is amongst the most slandered terms in the financial world, but there is no doubting that responsible lenders have an important role to play in the credit market.
New research has revealed the importance of borrowing from an accredited lender when it comes to short-term credit, with a third of people saying that government regulation will make the industry more trustworthy.
More than a quarter of the respondents said they are more likely to borrow money if the lender is accredited, with some 30% of women saying they are more likely to take out payday loans with an accredited lender.
Short-term loan provider Wizzcash.com has recently been formally approved by the Financial Conduct Authority (FCA), and is keen to highlight what that means. FCA approval means that the lender:
- Treats its customers fairly
- Encourages responsible lending
- Only provides loans to customers that meet affordability criteria
- Demonstrates forbearance
Commenting on the result, Hilton Freund, commercial and marketing director at Wizzcash.com, said: “Securing full FCA approval is a big win for our customers.
“It also gives us the confidence to continue operating, as we have, putting customer outcomes at the forefront of what we do.
“The FCA’s accreditation shows that treating our customers fairly is at the heart of what we do.”
The FCA has introduced a number of requirements on payday lenders, including:
- A price cap on the maximum amount a customer should pay
- A cap on default fees
- Customer are not to be charged more than double the loan value
- Lenders to assess the creditworthiness and affordability of customers
“We’ve made it a core part of our business to adhere robustly to FCA guidelines,” Mr Freund added. “We’ll only approve a loan if we’re confident an applicant can meet the repayments promptly and have passed an underwriting affordability assessment.”