The rise and rise of affordability complaints

Sara Williams

Chapter 10 in Debt and Austerity, 2020, pp 219-239 from Edward Elgar Publishing

Abstract: This chapter focuses on the response of the regulators to the massive expansion of payday loans from 2008-13 and the redress available to borrowers who were given loans they could not afford to repay. It sets out how recent lender failures were caused not by new payday loan specific rules, but by the increasing numbers of affordability complaints, with lenders unable to pay the refunds ordered by the Financial Ombudsman Service for irresponsible lending. As payday lending has declined, there has been more focus on other forms of high cost credit, from home-collected credit and guarantor loans to more mainstream credit such as overdrafts, credit cards and catalogues. Consumer bodies often call for the payday loan price cap to be extended to other markets. This chapter however advocates that an affordability-led approach to regulation may prove more effective in providing consumer protection.

Keywords: Economics and Finance; Geography; Law - Academic; Sociology and Social Policy (search for similar items in EconPapers)
Date: 2020
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