CONTROVERSIAL Edinburgh -based company Cheque Centre has agreed to stop selling payday loans after criticism by financial regulators.
It said it was pulling out of the market – where it typically charged customers interest at 3873 per cent APR – as part of an agreement with the Financial Conduct Authority, and had also suspended debt collection phone calls to customers.
The FCA’s predecessor, the Office of Fair Trading, expressed “serious concerns” about the Cheque Centre’s practices earlier this year.
The Evening News revealed in February how the city council was effectively subsidising the company with £700,000 of council taxpayers’ money by giving it half rent for its head office and call centre at Ratho Station – despite the authority’s public opposition to payday lenders.
FCA chief executive Martin Wheatley hailed the agreement with Cheque Centre on stopping payday loans and warned that others in the industry should take note.
He said: “This is an early victory for people that use payday lenders. I have said before that firms would need to dramatically improve their operation or exit the market, and we are now seeing that happening.”
New rules on payday loans were introduced last month when the FCA took over responsibility for the consumer credit industry. Lenders are now required to carry out more robust affordability checks and cannot allow borrowers to roll over loans more than twice.
Cheque Centre, which has 451 high street outlets across the UK, said: “The FCA made clear their expectations, under the new rules, and we offered to make immediate changes.
“One of the decisions we made was to accelerate our exit from payday lending.”
It said it would continue to offer cheque cashing, foreign exchange and traditional pawnbroking services.
The Cheque Centre office at Ratho Park is the company’s European headquarters and employs 180 people. It also serves as a base for parent brand Axcess Europe and related companies Cash Generator and The Loan Store. They are all owned by US firm Axcess Financial.
Mike O’Connor, chief executive of debt charity StepChange, said: “This is an encouraging sign that the short-term credit market is being cleaned up.
“All too often payday lenders have cynically exploited vulnerable consumers and we should all support the FCA in creating a short-term credit market that meets people’s needs whilst treating them fairly.”