Publishing the findings of its thematic review which covered 60% of the payday loan market from April 2014 to March 2015, the FCA said evidence of serious non-compliance and unfair practices were found in all firms reviewed.
The FCA said such practices often led to poor outcomes for many customers and in some cases, serious detriment and financial loss.
Firms are required to give customers ‘breathing space’ from persistent collections activity if they provide evidence that they are working with a debt advisor to manage their debts.
However at three firms, collection agents were accused of pursuing vulnerable customers who had fallen behind with repayments, despite proof of letters and documentation providing medical evidence and letters from debt advisors explaining why the customers were unable to pay.
Further evidence was found of firms engaging in misleading practices to seek payment from customers in arrears, as well as system failures which in some cases resulted in duplicate payments being taken.
The regulator highlighted that many firms had taken steps to change behaviour to meet the required FCA standards. These included changes to senior management, training staff to deal with struggling customers and improving monitoring, compliance and managing risk.
Tracey McDermott, director of supervision and authorisations at the FCA, said: “This segment of the industry has, for too long, been in the spotlight for the wrong reasons. It is essential that the more customer-focused approach we have started to see is maintained and embedded as we go forward.
“The real test for these lenders will be FCA authorisation where they will have to demonstrate exactly how much progress they have made if they want to remain in the market.”
The FCA added that some investigations were still ongoing and it was working with a number of firms to determine the appropriate levels of compensation for those affected.
