Payday lenders criticized for their silence on compensation

High-interest lenders and their auditors have come under fire for failing to disclose how much they may owe mistreated customers after a series of industry companies go bankrupt.

Loan companies have been battered by a wave of compensation claims from customers who say they were offered unaffordable credit in violation of city rules – but many remain silent about the total bill for that compensation.

Alan Campbell, founder of Salad Money, which lends money to NHS workers, said unaffordable borrowing continues in part because auditors do not always force companies to disclose in their accounts full responsibility for ‘they may incur in the event of potential compensation claims.

He said: “If lenders are burdened with the liability of unaffordable loans by disclosing them in their accounts, the practice will change as these lenders will not get financing. [from banks and investors]. “

The listeners were not charged with wrongdoing. Up to 26% of NHS staff face financial difficulties and many cannot access affordable loans, according to a University of Edinburgh report commissioned by Salad Money.

The study is based on a sample of almost 10,000 workers from the five lowest salary brackets in the NHS.

High cost and payday lenders charge interest rates of up to hundreds of percent for loans to customers with bad credit history who cannot access cheaper loans from banks.

Sunny, Quick Quid, Piggybank, Wonga and Wageday are among a large number of market players who have gone bankrupt in recent years after their accounts were signed by major audit firms such as Grant Thornton and Mazars. .

Mr Campbell said the University of Edinburgh’s findings showed consumers routinely struggled with unaffordable debt.

Amigo, which offers loans at an interest rate of 49.9%, is currently preparing for a restructuring that means many clients will only receive a fraction of the compensation they are owed.

Like other high-cost lenders, he said he was unable to estimate the maximum possible cost of his compensation claims.

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