Shamed payday lenders are still hounding vulnerable customers suffering from illness and bereavement despite pressure to clean up the industry, a report has found. Only one year after a new regulator was tasked with keeping loan companies in check, many are still employing bully boy tactics when a customer defaults on their repayments. The Financial Conduct Authority found that certain firms continued to be 'unsympathetic and inflexible' where a customer was in 'distress and financial difficulty'. The watchdog said one lender had even tried to extract money from customers by 'threatening visits to their home or place of work', despite having no policy to do so. Hounded: A year after the Financial Conduct Authority was tasked with regulating payday lenders, its report finds the firms are still hounding vulnerable customers (file photo) Others threatened to pass on customers' accounts to external debt collectors, even though they had no intention of doing so. The FCA said it uncovered 'misleading and occasionally threatening correspondence from lenders', despite an attempt to clamp down on such behaviour. David Mann, at comparison site uSwitch.com, said last night: 'It's shocking that vulnerable people are still being hounded, even when they're taking steps to get their debts under control. 'It's clear that more needs to be done to protect those trapped in a vicious circle of debt. 'There is a need for short term credit, but payday loans can be a very expensive way to borrow money. We need high street banks to step up and offer robust short term lending solutions.' Last April, the FCA was put in charge of regulating the payday industry in an attempt to tackle the number of people spiralling into unmanageable debt through these high-interest short-term loans. But the FCA's own report found evidence that high-risk applicants were still being accepted for loans, even where lenders had 'grounds to suspect that customers were at risk of, or already in, financial difficulties'. They said shambolic record-keeping meant calls and emails from customers admitting they were in difficulty and could not pay often 'fell through gaps' in the system. In some cases, companies had a backlog of correspondence from debt advice charities stretching back several weeks, meaning lenders were completely unaware of why customers had defaulted on their loan. This included medical evidence which would have explained why someone had stopped repaying their debt. Vulnerable: The FCA's own report found evidence that high-risk applicants were still being accepted for loans . 'In many cases, these customers were still being chased for their debts through daily letters, emails and phone calls', the FCA said. Even lenders which had logged details of customers' personal circumstances, including illness or bereavement, sometimes failed to tell debt collectors this. Some firms were also short-staffed and inadequately trained to deal with complex arrears cases, it added. However, it said some positive changes and been made and that most firms had significantly reduced the amount of fees and interest they charged customers who had fallen behind with their repayments. Joanna Elson, at the Money Advice Trust charity, said payday lenders must 'drastically improve the way they treat customers in financial difficulty'. She said: 'While the improvements already being made by firms are welcome, the FCA has been very clear that many are struggling with the pace of change required to bring them up to scratch.' The Financial Ombudsman Service, which resolves disputes when financial firms and consumers cannot come to an agreement, said it has seen vulnerable payday loan customers being treated in an 'alarming' way. The ombudsman has seen a 64 per cent increase in payday lending complaints since 2012 and it is currently taking on more than 70 new cases each month. It is finding in consumers' favour in around two-thirds of cases. The main complaint it deals with is a loan provider being unwilling to accept a suitable repayment plan, as well as poor administration and customer service. Gillian Guy, of Citizens' Advice Bureau, said: 'Some of the worst debt collection practices people tell us about come from payday lenders. 'People have sought our help after their lender told colleagues about their debts or pretended that they were bailiffs and threatened to seize belongings from their home. 'Important progress has been made since tougher FCA rules came in but many people are still falling foul of irresponsible lending. 'Payday loan firms should only lend to people who they know can afford to pay back the debt, and must point those who can't towards free debt advice.'
Lenders still 'bullying' customers suffering from illness and bereavement . Financial Conduct Authority claims firms continue to be 'unsympathetic'
One even threatened to visit customer's home despite policy forbidding it . Last year, FCA was tasked with regulating high-interest short-term loans . Its own report has found high-risk applicants still being accepted for loans .